Oil prices climbed on Thursday, extending gains after Brent crude moved above $100 a barrel in the previous session as traders assessed the risk of deeper supply disruptions following renewed attacks between the United States and Iran.
Brent crude futures rose 40 cents, or 0.4 per cent, to $101.61 a barrel, while US West Texas Intermediate crude gained 49 cents, or 0.51 per cent, to $96.54.
Brent has surged almost 30 per cent from its early August lows as efforts to secure a lasting agreement between Washington and Tehran to halt attacks failed to produce a permanent ceasefire. Fighting resumed later in August, adding fresh uncertainty to global energy markets.
PVM analyst John Evans said the latest price increase reflected growing expectations that the conflict could continue for longer than previously anticipated.
“If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated,” Evans said.
US President Donald Trump warned that Washington could strike Iran’s Pickaxe Mountain and urged Tehran to exercise caution. He also said the war was likely to continue beyond the November midterm elections, raising concerns about the duration of the conflict and its potential effect on energy supplies.
Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday after the United States sank five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
The Strait of Hormuz remains central to concerns about global oil supplies. Before the conflict, the strategic waterway carried roughly one-fifth of global oil and gas shipments. Flows have remained far below pre-war levels, creating additional pressure on the international oil market.
The situation has also raised concerns about alternative export routes. Iran-aligned Houthi militants have increased attacks against Saudi Arabia, putting further pressure on crude shipments through the Red Sea.
Although geopolitical tensions have pushed Brent above $100, analysts say the next direction for prices will also depend heavily on China, the world’s largest crude importer.
In the physical market, dated Brent, a benchmark used to price roughly two-thirds of global oil supplies, has remained above $100 since September 3, according to LSEG data.
China has increased crude purchases in recent weeks following months of subdued demand, providing additional support to physical oil markets, according to ING analysts.
Continued Chinese buying could intensify the impact of any supply disruptions and push prices higher. A decline in Chinese imports, however, could limit the rally.
David Jorbenaze, global oil market lead at commodities information provider ICIS, said weak Chinese demand had been a key factor supporting the bearish outlook for oil, but that buffer was no longer as dependable.
The combination of supply risks, military escalation and changing Chinese demand is leaving traders closely focused on developments in the Gulf and the wider global oil market.
