Gulf Tensions Send Oil Prices Soaring to $107

Oil prices surged to over $107 per barrel yesterday, marking their highest level since mid-May, as attacks on shipping in the Gulf region intensified. The Brent crude futures rose by $5.87 (5.8%) to reach $107.08 per barrel, while US oil topped $100 a barrel for the first time since May, increasing by $5.57 (5.8%) to $101.62.

The rise in prices is attributed to concerns about further disruptions to already tight supplies due to the ongoing conflict between Iran and the US. The Iran-aligned Houthis seized control of Yemen's port of Mokha yesterday, posing a threat to Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz.

PVM analyst John Evans stated that 'the recent run-up in prices lays bare the market's approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer.' US President Donald Trump warned that the US may hit Iran's Pickaxe Mountain, located near its heavily damaged Natanz uranium enrichment facility.

The durability of the rally is expected to depend on China, which has stepped up purchases in recent weeks after months of subdued demand. If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, while a pullback in imports could temper market gains.