Oil Prices Surge as Middle East Tensions Escalate

Oil prices surged over 4% on Wednesday amid escalating tensions in the Middle East. The U.S. and Saudi Arabia launched strikes against Iran-backed groups in Iraq, following a thwarted Iranian missile attack on U.S. forces. Brent crude futures climbed $3.72 to $87.81 per barrel, while WTI crude rose $3.43 to $82.69 per barrel.

Analysts noted that renewed military activity and Iran's stance on controlling shipping through the Strait of Hormuz contributed to the price jump. UBS analyst Giovanni Staunovo highlighted that depressed oil flows through the Strait and Iran's rejection of Oman's proposal for joint management further fueled price increases.

The Strait of Hormuz saw minimal tanker traffic this week, while alternative routes like the Bab el-Mandeb strait experienced increased shipments. Meanwhile, Yemen's Houthi group is considering imposing fees on ships sailing through the Red Sea. Analysts predict Brent prices will fluctuate between $80 and $100 per barrel in the near term.

Supporting oil prices, U.S. crude inventories fell by 3.3 million barrels last week. Additionally, OPEC+ is likely to pause output increases for three months starting in October, according to market sources.