Middle East Conflict Sends Brent Crude Above $100 per Barrel
Brent crude oil futures rose above $100 a barrel on Wednesday, hitting a six-week high and breaching a significant threshold. The price increase was driven by intensifying conflict in the Middle East, which has heightened concerns about oil flows from the region.
The recent attacks by Iran-backed Houthis on Saudi energy facilities have set oil installations ablaze, threatening to expand the conflict and disrupt crude shipments via the Red Sea. This key alternative route has become crucial since the Iran war began on February 28.
Market participants are pricing in a more prolonged conflict and the risk of disrupted oil flows from the Middle East, said Hamad Hussain, senior climate and commodities economist at Capital Economics. The recent attacks on oil tankers may lead to fewer ship-to-ship transfers taking place in the Gulf of Oman, which have provided oil to global markets and kept prices low.
A growing number of banks, including Goldman Sachs, Bank of America, and HSBC, have raised their crude price forecasts in recent days. Despite non-OPEC oil producers increasing output, the International Energy Agency expects global oil supply to fall by 4.3 million bpd this year, or about 4%.