US-Iran Tensions Send Oil Prices Soaring
The US attack on Iranian tankers has escalated tensions in the region, causing oil prices to surge. Brent crude traded near $97 per barrel, while West Texas Intermediate was around $92. The US launched strikes against three Iranian oil tankers over the weekend, destroying one, in retaliation for ballistic missile attacks on US Navy warships.
Iran's top security official said a new restricted zone outside of Hormuz will be declared in the coming days, beginning at the US Navy blockade line and extending into parts of the Gulf. This move is seen as a response to the US naval presence aimed at curbing Iranian oil exports and ensuring safe passage for commercial vessels through the strait.
Traders and industry executives are gathering in Singapore this week for the Asia Pacific Petroleum Conference, where the Iran war, tightening inventories, and China's demand outlook will be key topics. Hedge funds have turned bullish on Brent, increasing their positions in the week ended Sept. 1. Net-long wagers on US crude rose to the highest since June.
Goldman Sachs Group Inc.'s Daan Struyven said in a Bloomberg TV interview that if shipping attacks broaden and intensify, Brent could potentially reach $120 per barrel. US Energy Secretary Chris Wright said there would be no letup in the US naval presence, including the blockade aimed at curbing Iranian oil exports.
Haris Khurshid, chief investment officer at Karobaar Capital LP, said the market has repriced a lot of risk but not a true worst-case scenario. If shipping conditions deteriorate further or disruptions to actual barrels become sustained, $100 becomes much easier to justify.