Global oil prices climbed for a fourth consecutive session on Wednesday, with Brent crude moving closer to the key $100 per barrel mark as renewed fighting in the Middle East heightened concerns over potential disruptions to global crude supplies.
Brent crude futures rose 1.4% to $99.33 a barrel, while US West Texas Intermediate crude gained 1.4% to reach $94.34. The latest gains reflect growing concerns that the intensifying conflict could threaten energy infrastructure, shipping routes and the smooth movement of crude from the region.
Brent has risen sharply since early August, gaining around a quarter as hopes for a lasting end to the six-month conflict have weakened. Fresh attacks across the region have added further pressure to an already nervous energy market.
Tensions escalated on Tuesday after Iran-backed Houthi forces in Yemen launched attacks on several Saudi cities. The developments have further involved Saudi Arabia, a major oil producer and key US ally, in the widening regional conflict.
The United States also reportedly struck several Iranian oil tankers, while Iran targeted a US military base in Jordan. The escalation has raised concerns that further damage to energy infrastructure could restrict global oil supplies.
Oil loading at the Port of Fujairah in the United Arab Emirates was also at least partially halted following renewed Iranian attacks, increasing concerns about the security of regional energy shipments and important trade routes.
Analysts said oil markets were continuing to build a significant risk premium into prices because of uncertainty surrounding the conflict and the prospects for renewed peace talks. ING analysts said recent developments indicated that a restart of negotiations remained some distance away, warning that the market could continue pricing in the possibility of major supply disruptions.
Saudi Arabia has reportedly diverted some crude exports away from the Strait of Hormuz in an effort to keep supplies moving to international markets. However, analysts cautioned that continued attacks on Saudi energy facilities could make it increasingly difficult to maintain smooth crude flows.
OCBC analysts said attacks on Saudi energy infrastructure, combined with the destruction of several Iranian tankers, had increased fears of another prolonged disruption to oil supplies.
With Brent crude approaching $100 a barrel, developments across the Middle East are likely to remain a major factor for global energy markets. Any further disruption to production, storage or shipping could put additional upward pressure on oil prices and increase concerns over energy costs worldwide.
