Brent crude oil prices surpassed $100 a barrel for the first time since July, settling near $98, and West Texas Intermediate climbed above $94 a barrel, extending gains for a seventh consecutive session. This surge followed reports of the US striking multiple Iranian tankers near the critical crude-export hub of Kharg Island, significantly escalating tensions in the Middle East and raising concerns about disruptions to oil flows through the Strait of Hormuz.
The US military stated it "destroyed" five vessels belonging to Iran's Islamic Revolutionary Guard Corps (IRGC) in response to attempted missile attacks on a US warship. This action marks a further escalation in the ongoing conflict between the US and Iran, which has already seen a naval blockade significantly reduce Iran's oil exports.
The broader Middle East conflict has contributed to a substantial increase in oil prices, with Brent crude rising by a quarter since early last month. Analysts like Darrell Fletcher, managing director for commodities at Bannockburn Capital Markets, suggest the market path is towards a "strong and steady grind higher" as the war enters its seventh month. The fundamental picture for refined products remains bullish due to deteriorating global inventories and reserves, with products like diesel experiencing even sharper rallies.
In addition to the US strikes, recent attacks by Iran-backed Houthis on Saudi energy facilities have further threatened crude shipments, particularly those routed through the Red Sea—a key alternative to the Strait of Hormuz. The Strait of Hormuz, through which about a fifth of the world's oil and liquefied natural gas passed before the Iran war, continues to face severe curtailment of crude flows since February 28.
