Crude Oil Prices Surge Above $100 per Barrel Amid Strait of Hormuz Tensions
Crude oil prices have broken above $100 per barrel, and analysts warn that this rally has legs. The surge is due to escalating tensions in the Strait of Hormuz, where tanker traffic has decreased significantly since September 2. Despite earlier reports of improving tanker traffic, Brent crude finally broke through the $100 threshold on Wednesday morning, while WTI crude followed suit on Thursday morning.
The main factor constraining prices for months was the recovery of crude oil flows out of the Persian Gulf, which averaged between 6 and 8 million barrels per day in early August. However, recent data show that daily flows have dropped to below 2 million barrels per day since fighting resumed between U.S. and Iranian forces.
Some Middle Eastern producers have found alternative channels to send their crude abroad, using pipelines to ports outside the Strait of Hormuz. For example, the UAE uses a pipeline to the port of Fujairah, while Iraq sends its crude to Turkey via a pipeline.