Brent holds above $100 as tanker attacks deepen supply fear

Oil prices remained elevated on Thursday, with Brent crude surpassing the $100 mark, as traders anticipated further supply constraints following Iran and the United States' most significant attacks on maritime transport since their six-month conflict commenced. The Brent crude futures experienced a slight decline of 0.1%, settling at $101.10 a barrel by 0256 GMT.

Meanwhile, U.S. West Texas Intermediate crude climbed to $96.24 a barrel, marking a 0.2% increase. The Reuters Power Up newsletter, penned by columnist Ron Bousso, offers comprehensive insights into the global energy sector. Subscribers can sign up to access the newsletter here.

Since early August, Brent prices have surged by approximately 30%, propelled by the absence of a permanent cease-fire between the U.S. and Iran. Despite a temporary agreement to halt attacks, renewed hostilities erupted later in the month. Iran alleged on Wednesday that it had targeted ten vessels near the Strait of Hormuz following the U.S. sinking of five Iranian oil tankers.

The Islamic Revolutionary Guard Corps warned of escalating responses to any additional attacks. Daniel Hynes, an analyst at ANZ, expressed concern, stating that the back-and-forth nature of the attacks suggests that oil flows from the Persian Gulf are likely to remain interrupted for the foreseeable future.

Oil passages through the Strait of Hormuz, the waterway that previously facilitated roughly one-fifth of global oil and gas supplies prior to the war, have plummeted to levels far below pre-war figures. Heightened pressure is mounting on alternative pathways for Gulf oil exports, as Iran-aligned Houthi militants have intensified assaults on Saudi Arabia, potentially jeopardizing crude shipments through the Red Sea.

The lack of clarity regarding the actual volumes emanating from the Strait of Hormuz and ongoing shipping disruptions are maintaining tight physical markets, thereby bolstering a geopolitical risk premium in oil prices, according to OCBC analyst Christopher Wong. In the physical crude oil market, the dated Brent benchmark—serving as the reference point for approximately two-thirds of supply—has been above $100 per barrel since September 3, as per LSEG data.

The U.S. Energy Information Administration raised its oil price projections for this year and the following period on Wednesday, citing a decline in global stockpiles due to the loss of Middle Eastern supply.