Oil Nears $100 As Middle East Strikes Threaten Global Supplies

Oil prices climbed for a fourth straight session on Wednesday, with Brent crude approaching $100 a barrel as a new wave of attacks across the Middle East heightened fears that the conflict could further disrupt global energy supplies.

Brent crude futures rose $1.57, or 1.6 percent, to $99.49 a barrel, their highest level since late June. U.S. West Texas Intermediate crude rose $1.60, or 1.7 percent, to $94.63.

The latest gains came after Iranian-backed Houthi forces in Yemen attacked several cities in southern Saudi Arabia, while the United States said it had destroyed Iranian oil tankers and Iran launched a missile strike against a U.S. military base in Jordan.

The widening violence has added to concerns that oil supplies from the Middle East could face further disruption after weeks of attacks on energy infrastructure and shipping routes.

Brent has risen about 25 percent since early August as hopes for a lasting settlement to the six-month-old conflict have faded and fighting has intensified. The benchmark had already risen to a six-week high on Tuesday after Houthi attacks set fire to energy installations in Saudi Arabia.

Attacks Spread Across the Region

The Houthis said they had launched a broad operation against targets in Saudi Arabia, including a military air base in Khamis Mushait and energy facilities in Abha, Najran and Jazan.

Saudi authorities said the attacks wounded 73 people and caused fires at several civilian and economic facilities. The Jazan refinery, which has a processing capacity of about 400,000 barrels a day, was among the facilities affected, according to Saudi officials and reports from the Associated Press.

The attacks marked a sharp escalation in fighting involving the Houthis, who control much of northern Yemen and have previously targeted shipping in the Red Sea.

The renewed violence has raised concerns that the conflict could spread beyond the Strait of Hormuz, the strategic waterway through which a significant portion of the world’s oil trade normally passes.

At the same time, the U.S. military said it had destroyed Iranian crude carriers. Washington said the action followed attacks by Iran’s Islamic Revolutionary Guard Corps against a U.S. Navy vessel.

Iran responded by firing ballistic missiles at a U.S. base near Al Azraq in Jordan, according to Iranian state media. Jordanian authorities said their air defenses intercepted most of the missiles and reported no casualties.

The developments have left traders increasingly concerned that the latest escalation could last longer than previous flare-ups.

“Recent developments only reinforce the view that we are still some way from a restart in peace talks,” analysts at ING said in a note, adding that oil prices were likely to continue carrying a substantial geopolitical risk premium.

Shipping Routes Face New Pressure

The Strait of Hormuz remains the central concern for energy markets.

Oil exports from the Gulf have already been severely disrupted by attacks on energy infrastructure and vessels. Shipping traffic through the strait has fallen sharply, raising questions about how long producers and traders can maintain alternative routes.

Saudi Arabia has redirected some exports away from the strait, but sustained attacks on its own energy infrastructure could complicate efforts to keep crude moving to international markets.

OCBC analysts said the attacks on Saudi energy facilities, combined with the destruction of Iranian tankers, had revived fears of a prolonged disruption to oil supplies.

The Houthis have also threatened shipping around the Red Sea, another critical route linking Middle Eastern producers with global markets. The group has previously attacked commercial vessels in the region, adding to the shipping risks created by the conflict around Hormuz.

The market’s immediate focus is now on whether Brent can break above $100 a barrel, a level that traders have watched closely as a marker of the conflict’s economic impact.

But the larger concern is whether further attacks on oil facilities, tankers or shipping lanes could turn the current price surge into a sustained supply shock.

For consumers and central banks, that would carry consequences beyond the oil market. Higher crude prices can raise the cost of gasoline, diesel, aviation fuel and other products, adding to inflationary pressures at a time when investors are already watching monetary policy closely.

For now, oil traders are pricing in the possibility that the latest escalation is more than another short-lived flare-up.

Brent’s approach toward $100 reflects the growing concern that the longer the conflict continues, the greater the risk that disruptions to Middle Eastern energy supplies become harder to contain.