Brent Crude Surges Past $100 Amid Middle East Tensions

Brent crude oil prices have surged to six-week highs, breaching the $100 per barrel mark for the first time since July 24. The price hike is attributed to escalating tensions in the Middle East and uncertainties over oil transits through the Red Sea route.

Oil prices rose by 2% following reports of attacks by the Iran-backed Houthis on Saudi's oil facilities. This has added scrutiny to crude oil transits through the Red Sea route, a key alternative for shipments that used to move through the Strait of Hormuz before the US-Iran war.

Brokerages have lifted their year-end crude oil forecast due to supply risks and mounting inflationary concerns. According to Hamad Hussain, senior climate and commodities economist at Capital Economic, market participants are pricing in a more prolonged conflict in the Middle East as well as the risk that recent attacks disrupt oil flows from the region.

OPEC production declined by 900,000 barrels per day in August to almost 19.9 million barrels per day, partly reversing the increase that followed the signing of the now-failed MOU. The decline was primarily driven by a 1.1 mb/d slump in Saudi output amid attacks on pipeline infrastructure.