Oil prices have surged, with Brent crude oil nearing $102 a barrel and West Texas Intermediate trading around $97. This increase is attributed to heightened hostilities in the Middle East, particularly Iran's declaration of readiness for a more intense war following US attacks on its territory and infrastructure. The global benchmark rose for a fifth consecutive day, closing above triple figures for the first time since July.
The escalation in the US-Iran conflict, now in its seventh month, has raised concerns among analysts about significant disruptions to energy flows, especially through the Strait of Hormuz. Goldman Sachs has warned that oil prices could surge above $120 a barrel if attacks on shipping intensify. US forces recently destroyed five Iranian crude oil tankers after attempted missile attacks on a US Navy warship, further exacerbating tensions.
Market sentiment indicates that the physical oil market could tighten further due to declining transit volumes, broader regional escalation, or threats to energy infrastructure. This situation has led to a complete unwinding of the selloff seen in WTI between early June and July, with Brent prices now significantly higher than they were in early June. The ongoing geopolitical instability is expected to maintain high volatility in oil prices.
