Brent Oil rises above $100 a barrel on Mideast war flare-up
Benchmark Brent crude oil futures rose past $100 a barrel on Wednesday, breaching the symbolic barrier for the first time since July 24 as intensifying conflict in the Middle East fuelled growing concern about oil flows from the region. Brent crude futures rose $2.15, or 2.2%, to $100.07 a barrel by 0721 GMT, while U.S. West Texas Intermediate crude was up $1.70, or 1.83%, at $94.73 a barrel.
Brent crude prices have risen by a quarter since early last month as hopes fade for a permanent resolution to the six-month-old U.S.-Iran conflict. With the US-Iran conflict now in its seventh month and showing no sign of calming despite White House claims of an imminent deal, investors are growing increasingly anxious that the Federal Reserve will have to hike interest rates to cap surging consumer prices. The two foes are locked in a stalemate six months into the war, with Tehran maintaining a stranglehold on the Strait of Hormuz, a vital shipping route for the world’s oil and gas, and Washington pushing a campaign to choke the Islamic republic’s ports and economy.
Iran said Wednesday it had struck a US military base in Jordan following American attacks on its vessels in the Strait of Hormuz, which itself was in retaliation for ballistic missile launches at a US warship. Tehran also said it would target oil tankers off Kuwait and Bahrain and urged crews to leave their ships, according to the IRNA state news agency. That came after Saudi Arabia and Iran-backed Houthis in Yemen exchanged strikes, with the rebels targeting oil facilities in an offensive towards the Red Sea’s Bab al-Mandab chokepoint. The waterway is an increasingly important route for Saudi oil with the Strait of Hormuz shut.
Both main crude contracts jumped more than one percent Wednesday, with Brent hitting as high as $99.68 and a whisker away from the $100 last touched in July. West Texas Intermediate was heading towards $95 for the first time since June. The surge in energy costs has kept inflation elevated globally and is putting pressure on central banks to hike borrowing costs, with the European Central Bank tipped to do so Thursday. All focus is on the release of the US consumer price index Friday, which is seen as the key to whether the Fed lifts rates next week or not.
“The continuing conflict in the Middle East is keeping concerns over supply disruptions, and that in turn is worrying investors about the inflationary consequences of elevated oil prices,” said Fawad Razaqzada, a market analyst at FOREX.com.
