Brent crude rises above US$100 a barrel as Middle East conflict intensifies

Brent crude oil prices surged past US$100 a barrel on Wednesday (Sep 9), reaching a six-week high as conflict in the Middle East escalates. The benchmark crude surpassed US$99.93 a barrel, up 2.05 per cent from earlier in the day. US West Texas Intermediate crude also rose 1.60 per cent to US$94.52 a barrel. Brent prices have climbed a quarter since early last month, after hopes faded for a resolution to the six-month-old US-Iran conflict.

Since Iran's war started on Feb 28, Brent crude peaked at US$126.41 a barrel on Apr 30. Recent attacks by Iran-backed Houthis on Saudi energy facilities have set oil installations ablaze and threaten crude shipments via the Red Sea, a key alternative to the Strait of Hormuz. Market participants expect the conflict to persist and oil flows from the Middle East to be disrupted, said Hamad Hussain, a senior climate and commodities economist at Capital Economics.

Banks such as Goldman Sachs, Bank of America, and HSBC have raised their crude price forecasts recently. Global oil supply is projected to fall by 4.3 million bpd this year due to non-OPEC producers ramping up output, according to the International Energy Agency.