Middle East Conflict Drives Oil Prices to Fresh Three-Month High

The situation in the Middle East has escalated, threatening to push the region into an all-out regional war. The US and Iran exchanged attacks on Tuesday, while the Iran-backed Houthi militias from Yemen entered the conflict, hitting oilfields in neighboring Saudi Arabia.

The Saudis have retaliated, striking targets in Yemen. This has caused shipping strains to deepen as canal disruptions and fuel concerns mount. The Strait of Hormuz, a waterway that carries about 20% of global supply, is facing limited oil traffic due to attacks on vessels.

Rabobank analysts warn that 'maritime nations are warning that global shipping rules are collapsing' which could have severe consequences for global trade. Dean Struyven, co-head of global commodities research at Goldman Sachs, has warned that Oil prices might reach $120 per barrel due to the risk of shipping disruptions broadening and intensifying.