Oil Prices Soar Amid Escalating Middle East Conflict
Oil prices surged to their fourth straight gain on Wednesday, reaching over $1 increase in early trade after Iran launched missiles at Jordan. The Middle East conflict continues to escalate, with recent developments threatening supply disruptions. Brent crude futures rose 1.4% to $99.33 a barrel, while U.S. West Texas Intermediate crude was up 1.25% to $94.34.
The price of Brent crude has jumped by a quarter since early August, as hopes for a permanent resolution to the six-month-old war have faded and fighting flared again. The recent attacks on Saudi cities by Iranian-backed Houthis in Yemen further embroiled a U.S. ally in the conflict. The U.S. forces hit multiple Iranian oil tankers, while Iran targeted a U.S. base in Jordan.
Analysts at ING noted that the market is likely to continue pricing in a sizeable risk premium due to ongoing tensions in the region. Saudi Arabia has diverted some exports away from the Strait of Hormuz, but any sustained attacks on the kingdom could complicate efforts to keep crude flowing to global markets.