Brent oil crosses $100 for first time in two months as Middle East conflict flares

On Wednesday, Brent oil prices reached $100 for the first time in about two months due to heightened tensions in the US-Iran conflict and concerns over disruptions in the global oil supply chain. The international benchmark for Brent crude futures rose by around 3%, crossing the $100 per barrel mark, while WTI crude futures gained over 2%, pushing past $95.

The ongoing Middle East conflict, now in its seventh month, has continued to hinder the flow of energy products from the Persian Gulf as the US and Iran remain at war, with shipping in the Strait of Hormuz constrained by the threat of violence. The US military targeted five Iranian crude oil tankers overnight, responding to Iran's attempts to strike US Navy carriers in the region.

This marks the second day in a row American forces have attacked Iran's shipping sector. Over the past two weeks, the US and Iran have returned to a more aggressive stance, exchanging retaliatory strikes after months of negotiations that eased tensions. The Strait of Hormuz, responsible for about 20% of crude oil flows before the war, remains severely restricted, with shippers weighing the risks of shipping against potential harm to crew and cargo.

Oil investors are reacting strongly to the situation, indicating that unless the Strait of Hormuz reopens and supplies normalize, supply will not align with demand. Meanwhile, other geopolitical tensions are impacting the global energy market, including attacks by the Houthi group on Saudi Arabian energy infrastructure and Ukrainian strikes on Russia's refining sector.

China has begun to increase crude imports, potentially affecting global prices. If disruptions continue, oil futures could rise to $120 per barrel, according to Goldman Sachs strategists. In the refined products market, gasoline prices averaged $4.22 per gallon in the US, while diesel reached $5.94, both at their highest levels since 2022, putting pressure on consumers and businesses amid rising inflation.