Brent Crude Oil Breaks Above $100 a Barrel Amid Escalating Iran-US Tensions
The price of Brent crude oil has broken above $100 a barrel for the first time since late July, as tensions between Iran and the US escalate. The conflict has been ongoing since February 28, but recent attacks on shipping have increased concerns about supply disruptions from the Middle East.
Ole Hansen, head of commodity strategy at Saxo Bank, said that market expectations had to change their view on how long the crisis will continue to curb supply. Futures prices are moving closer to physical crude and fuel markets, where tight supply has been apparent for most of the conflict.
The Strait of Hormuz, a key artery responsible for transiting about one-fifth of the world's oil and gas supply, remains far below its pre-war peak. Shipping volumes through the strait have fallen below 2 million barrels per day, down from 8-9 million barrels per day before the recent resumption of fighting.
The attacks on tankers have raised concerns that disruption could spread beyond Iranian supply to infrastructure and alternative routes that help keep Gulf crude flowing. The price of US gasoline is currently averaging $4.22 a gallon, while diesel prices are at a record and closing in on $6 a gallon.