Oil Prices Surpass $100 For First Time in 4 Months on Middle East Tensions
Oil Market Reacts to Escalating Middle East Conflict
SINGAPORE, Sept 11 (Reuters) - Oil prices rose on Friday and both major benchmarks are on track to end the week at over $100 a barrel for the first time since mid-May, as increasing attacks along key shipping routes in the Middle East fuel fears of a prolonged disruption to supplies.
Benchmark Performance and Weekly Gains
Brent crude futures rose $1.05, or 1%, to $108.68 a barrel by 0045 GMT. U.S. West Texas Intermediate crude rose 95 cents, also 1%, to $103.45 a barrel. Both benchmarks rose over 6% on Thursday.
On a weekly basis, the benchmarks were trading nearly 13% higher - the steepest gain since the week ended July 17.
Key Shipping Routes Under Threat
Red Sea and Strait of Hormuz Disruptions
Iran-aligned Houthis seized control of Yemen's port of Mocha on Thursday, posing a further threat to Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.
Escalation of Regional Tensions
Attacks from Yemen on Saudi energy facilities marked an escalation beyond Iran and the Strait of Hormuz, and raised fears of prolonged disruptions in the broader region, analysts say.
U.S. President Donald Trump warned the U.S. may hit Iran's Pickaxe Mountain, located near its heavily damaged Natanz uranium enrichment facility, and said the war would end after the November midterm elections.
Analyst Perspectives
"With events spiralling and Iran showing it is willing to stretch this conflict as wide and as long as it can, it is becoming increasingly likely that WTI crude will retest the $119.48 high from early March," IG analyst Tony Sycamore said.
Impact on Global Oil Supply and Prices
Iran and U.S. Actions
Iran said it had attacked 10 ships near the strait on Wednesday, after the U.S. hit five Iranian oil tankers. Iran's Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
Domestic Fuel Prices and Supply Squeeze
The U.S. national average price of diesel surpassed $6 a gallon for the first time ever on Thursday, according to price tracker GasBuddy, as the U.S.-Iran war and Ukrainian attacks on Russia's refineries have squeezed supply.
Global Demand and OPEC Outlook
China's Role in Oil Demand
Analysts said the rally's durability will hinge on China, the world's largest crude importer. If China continues to buy, it could amplify the impact of supply disruptions and drive prices higher.
OPEC Production and Demand Forecasts
OPEC lowered its forecast for world oil demand growth in 2026 to 380,000 barrels per day, a copy of its monthly report showed, marking the fifth straight downward revision. OPEC oil output fell by 640,000 bpd in August, a Reuters survey found.
(Reporting by Sudarshan Varadhan; Editing by Michael Perry)
