Brent crude oil prices climbed above $100 a barrel on Wednesday for the first time since July 24. The sharp rise came as escalating conflict in the Middle East raised fresh concerns about oil supplies from the region.
Brent futures gained $2.15, or 2.2%, to reach $100.07 a barrel by 0721 GMT. At the same time, U.S. West Texas Intermediate crude rose $1.70, or 1.83%, to $94.73 a barrel.
Middle East Conflict Drives Oil Prices Higher
Oil markets have reacted strongly to the worsening situation in the region. Brent crude has gained about 25% since early last month as hopes for a lasting resolution to the six-month U.S.-Iran conflict have weakened.
Meanwhile, attacks by Iran-backed Houthis on Saudi energy facilities this week added to market concerns. Several oil installations were reportedly set on fire, raising fears that the conflict could spread further across the region.
The attacks could also threaten crude shipments through the Red Sea. The route has served as an important alternative to the Strait of Hormuz. However, oil flows through the key waterway have fallen sharply since the Iran war began on February 28.
Oil Supply Concerns Grow
The Strait of Hormuz remains a major focus for energy markets. Before fighting resumed on August 30, around 8 million to 9 million barrels per day moved through the waterway, according to Rystad Energy Chief Economist Claudio Galimberti.
That volume was roughly twice the level recorded during the previous week. More recently, however, flows have dropped below 2 million barrels per day.
As a result, several major banks have raised their oil price forecasts. Goldman Sachs, Bank of America and HSBC are among the financial institutions that have recently adjusted their outlooks.
Global Oil Supply Faces Pressure
Oil producers outside OPEC have increased output to help offset supply risks. The United States, Canada and Guyana have all expanded production.
Even so, the International Energy Agency warned last month that global oil supply could fall by 4.3 million barrels per day this year. That would represent a decline of roughly 4%.
For now, traders remain focused on developments in the Middle East. Any further disruption to major shipping routes could place additional pressure on global oil supplies and keep crude prices elevated.
