Oil touches $107 per barrel as Hormuz remains choked for over six months
This week, oil prices surged past a hundred dollars per barrel amidst growing worries over supply disruptions caused by attacks on shipping routes in the Middle East. US fuel prices reflect this trend as supply chains experience strain. The trajectory of future oil prices will heavily depend on China's import choices, with OPEC adjusting its global oil demand growth forecast for 2026.
Oil prices surged past the $100 per barrel mark on Friday, reaching their highest level in over four months, as concerns about potential supply disruptions intensified in the Middle East. The Brent crude price was reported at $107.70 per barrel, up marginally from the previous day, while WTI crude reached $102.50 per barrel, holding steady. Both benchmarks had skyrocketed by more than 6% on Thursday, marking a weekly gain of nearly 13%, the steepest increase since the week of July 17.
The recent price surge was fueled by heightened risks to oil shipments across both the Red Sea and the Gulf. Iran-aligned Houthis had taken control of Yemen's port of Mocha on Thursday, presenting an additional threat to Red Sea traffic. Meanwhile, the Strait of Hormuz remained under restriction due to persistent tanker attacks in recent days. The ongoing attacks on Saudi energy facilities have further complicated the oil market outlook, extending risks beyond just Iran and the Strait of Hormuz.
US President Donald Trump threatened that the US might target Iran's nuclear facility, known as Pickaxe Mountain, situated near Natanz. He expressed the likelihood that the conflict would persist beyond the November midterm elections. In response, Iran reported attacking ten ships near the strait on Wednesday, following the US assault on five Iranian oil tankers. The Islamic Revolutionary Guard Corps (IRGC) stated that it would intensify its retaliation to any further attacks.
The repercussions of these attacks have also become apparent in US fuel prices. On Thursday, the national average price of diesel crossed the $6 mark for the first time ever, according to the GasBuddy price tracker. This upward trend in fuel costs can be attributed to the ongoing US-Iran war and the Ukrainian attacks on Russia's refineries, which have severely constrained global supply.
Analysts emphasized that the sustainability of the oil rally would largely hinge on China's oil import behavior, as China is the world's largest crude importer. ING analysts noted that China's recent surge in purchases, following months of subdued demand, has bolstered physical crude markets. Continued buying from China could amplify the impact of supply disruptions and propel prices even higher. However, a decline in Chinese imports could temper market gains.
OPEC reduced its forecast for global oil demand growth in 2026 to 380,000 barrels per day, according to a copy of its monthly report. This was the fifth consecutive downward revision to its demand growth forecast. OPEC's oil output also declined by 640,000 barrels per day in August, according to a Reuters survey, as Saudi exports faced new disruptions due to the Iran war and a US blockade affecting Iran's shipments.
US crude oil inventories dropped by 391,000 barrels to 424.1 million barrels last week, as refining activity remained robust, according to the Energy Information Administration.
Written by urgent.news from Times of India's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
