Oil Prices Soar Above $100 Per Barrel Amid Middle East Conflict

Oil prices surged above $100 per barrel on Wednesday as tensions in the Middle East intensified. The benchmark Brent crude futures rose by $2.01, or 2.05%, to hit a six-week high of $99.93 per barrel.

The increase is largely due to concerns over oil flows from the region, which have been disrupted by ongoing conflict between the US and Iran. Since the February 28 start of the conflict, Brent crude prices have risen by a quarter since early last month as hopes for a permanent resolution fade.

Attacks by Iran-backed Houthis on Saudi energy facilities set oil installations ablaze, threatening a significant expansion of the conflict and disrupting crude shipments via the Red Sea. This has led market participants to price in a more prolonged conflict in the Middle East, according to Hamad Hussain, senior climate and commodities economist at Capital Economics.

Roughly 8 million to 9 million barrels per day had flowed through the Hormuz Strait before fighting resumed on August 30, but this has since fallen below 2 million bpd. The International Energy Agency expects global oil supply to fall by 4.3 million bpd this year, or about 4%.