Middle East Hostilities Push Oil Prices Past $100

Bangla Press Desk:  Oil prices rose past $100 (£74) a barrel on Wednesday after further strikes in the conflict between the US and Iran and continuing attacks of Tehran-backed Houthis in Saudi Arabia.

Brent crude oil futures - which is the global benchmark for prices - has not been as expensive since the end of July, when a ceasefire between Iran and the US collapsed.Brent crude futures were up $2.77, or 2.83%, at $100.69 a barrel by 1033 GMT, as intensifying conflict in the Middle East heightened concerns about oil flows, catching up to physical oil and fuel prices which have passed the psychological threshold already.

US West Texas Intermediate crude was up $2.18, or 2.34%, at $95.21 a barrel, its highest level since early June.

Since the Iran war began on 28 February, Brent has surged as high as $126.41 a barrel, a peak reached on 30 April."The move towards and back above $100 Brent is reflecting a market that increasingly has to change its view on how long the Middle East crisis will continue to curb supply from the region," said Ole Hansen, head of commodity strategy at Saxo Bank.

This week, attacks by Iran-backed Houthis on Saudi energy facilities set oil installations ablaze, threatening a significant expansion of the conflict.

The attacks also threaten crude shipments via the Red Sea, which has been a key alternative route to the crucial Strait of Hormuz, where oil flows have been severely curtailed.

In a sharp escalation of the six-month-old war, US forces hit multiple Iranian oil tankers and Iran targeted a US base in Jordan and attacked ships.

Supply risks mount

"Market participants appear to be pricing in a more prolonged conflict in the Middle East as well as the risk that the latest escalation in military strikes disrupts oil flows from the Middle East," said Hamad Hussain, senior climate and commodities economist at Capital Economics."The key risk is whether the recent attacks on oil tankers lead to fewer ship-to-ship transfers taking place in the Gulf of Oman, which have so far played a key role in providing oil to global markets and keeping a lid on prices."

A growing number of banks, including Goldman Sachs, Bank of America and HSBC, have raised their crude price forecasts in recent days.

In the week before a resumption in fighting on 30 August, roughly 8 million to 9 million bpd had flowed through Hormuz, double the previous week's volume, according to Rystad Energy's Chief Economist Claudio Galimberti, although more recently it had fallen below 2 million bpd.

Fuels, physical crude oil already above $100

In the physical crude oil market, the dated Brent oil benchmark, against which roughly two thirds of supply is priced, has been above $100 per barrel since 3 September, according to LSEG data.

Physical oil markets react quickly to supply disruptions as buyers need to go into the market to seek alternative cargoes.

Meanwhile, consumers have been paying over $100 for their oil in the form of refined fuels like gasoline and diesel for most of this year, as conflicts created a global refining crunch which sent fuel prices soaring even relative to crude.

European diesel futures were trading at around $199 per barrel on Wednesday, and have not been below $100 per barrel since the start of the Iran war.

Diesel refining margins, or the fuel's premium to crude, have been at all-time highs since August as fuel shortages gripped markets, touching $78.90 per barrel on 1 September.

By contrast, the margin averaged $21 per barrel in 2025 and $19.52 in 2024.

"The outlook for middle distillate products, such as diesel, jet fuel, and fuel oil, continues to point to very tight market conditions, raising the risk of further price spikes," Saxo Bank's Hansen said.

European gasoline has also been above $100 since March, and its premium to crude neared all-time highs of above $60 per barrel at the start of the month.

In the US, consumers faced record gasoline prices over the Labor Day holiday weekend, while diesel prices hit all-time highs last week as supply concerns continued to tighten fuel markets.

"It complicates the picture because central banks around the world are trying to grapple with high inflation," said Nitesh Shah, commodity strategist at WisdomTree.