US-Israel-Iran Conflict Drives Oil Prices Past $100 Per Barrel

Oil prices surged past $100 per barrel again as escalating tensions between the US, Israel, and Iran triggered severe volatility in the global crude market. The conflict, which began in February, has continued to intensify, with concerns over a protracted war driving up oil prices. In early September, WTI crude reached an intraday high of $102.60 per barrel, while Brent crude hit a peak of $107.52 per barrel.

The primary driver behind the rally is the compounding risks to two major energy shipping lanes: the Strait of Hormuz and the Bab el-Mandeb Strait. Houthi forces have announced control over the port of Mocha in Yemen, expanding their dominance over the Bab el-Mandeb Strait. This strait serves as an alternative export route for Saudi crude bypassing the Strait of Hormuz.

The drone attack on the Ryazan refinery in Russia has also exacerbated tightness in the global refined products market, further fueling the price increase. Analysts at TradeNation believe that if shipping volumes shrink further and energy infrastructure suffers larger-scale damage, the physical crude oil market will tighten further, leaving more room for oil prices to rise.

As long as no stable and permanent ceasefire agreement is reached, uncertainty regarding navigation through the two major energy corridors will continue to support the central tendency of oil prices. The US public political narrative has projected expectations of a ceasefire after the election and lower oil prices, but internal assessments suggest that a protracted conflict remains a plausible scenario.