Brent oil tops $100 as Middle East conflict intensifies, stoking supply fears

Brent oil prices have surged past the $100 mark on Wednesday, reaching their highest since late May, due to escalating tensions in the Middle East. The conflict intensified when Iran and the U.S. attacked each other's tankers, causing concerns over the disruption of energy supplies from the region. Front-month Brent crude futures settled at $101.21 a barrel, up 3.4% from the previous trading session.

U.S. West Texas Intermediate crude also rose 3.25%, closing at $96.05 a barrel. Since late May, oil prices generally traded below $100, but the market's perspective has changed with the resumption of attacks. Ole Hansen, head of commodity strategy at Saxo Bank, noted that futures prices are now aligning more closely with physical crude and fuel markets, where tight supply has become evident.

Shipping volumes through the Strait of Hormuz, responsible for about one-fifth of the world's oil and gas supply, have dropped below pre-war levels, further exacerbating the supply crunch. As attacks continue, there are growing fears that this could lead to reduced ship-to-ship transfers in the Gulf of Oman, potentially causing oil prices to rise even further.