Brent Crude Surges Past $100 on Middle East Tensions
Crude oil prices surged to six-week highs on Wednesday, breaching the crucial $100 per barrel mark for the first time since July 24. The global benchmark Brent was quoted at $99.80/bbl, while the US-contract West Texas Intermediate (WTI) hovered near the $95/bbl level.
The price increase comes as escalating tensions in the Middle East and uncertainties over oil transits through the Red Sea route kept prices under pressure. Oil prices were up 2%, with Brent breaching the $100 mark due to concerns over supply risks and mounting inflationary pressures.
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. Hussain noted that the major risk is whether the latest attacks will lead to fewer transits through the Gulf of Oman.
OPEC crude production fell by 900,000 b/d last month to 19.9 mb/d, almost 10 mb/d below pre-war levels. This reversal was primarily driven by a 1.1 mb/d slump in Saudi output amid attacks on pipeline infrastructure.