Oil prices saw a significant jump on Thursday, with Brent crude futures surging over 7% to close at $100.69 per barrel, marking its first time above $100 since May 26. U.S. West Texas Intermediate (WTI) crude also advanced, settling at $92.19, up about 6%. This surge accounts for more than a 30% increase in oil prices this month, driven by escalating fighting in the Middle East and growing concerns over global supply disruptions.
The rise in prices is largely attributed to Houthi allies in Yemen targeting two Saudi oil tankers with drones and missiles in the Red Sea, following a declared maritime blockade against Riyadh. In response, President Donald Trump threatened a "massive attack" against Iran, vowing to hold Tehran responsible for future Houthi attacks. RBC Capital Markets' Helima Croft cautioned that extreme pressure in the Middle East could push Brent oil prices beyond the 2022 high of $128 per barrel, potentially even surpassing the 2008 peak of $146 per barrel in a full-scale regional war scenario.
The ongoing conflict between Russia and Ukraine also contributes to market pressure, with Kyiv reportedly attacking over 150 tankers in the Black Sea and Sea of Azov this month. These attacks have forced the Caspian Pipeline Consortium to halt crude loading at its Black Sea terminal, impacting approximately 80% of Kazakhstan's crude exports. The closure's duration is uncertain, and limited alternate routes for Kazakhstan's 1.7 million barrels per day production could lead to shut-ins, further tightening global supply.
Average gasoline prices in the US have also risen, with the motorist advocacy group AAA reporting prices climbing to $4 per gallon, up from $3.92 a month ago. In the UK, petrol prices are now nearing £1.56 per liter, an increase from £1.34 a liter earlier in the month. Analysts warn that higher oil prices could exacerbate inflation, posing a challenge for central banks like the Bank of England, which has kept interest rates at 3.75% for the past four meetings.
