Oil prices advanced on Thursday, with Brent crude trading above $100 a barrel as investors assessed the risk of additional supply disruptions following attacks on shipping involving the U.S. and Iran.
Brent crude futures rose 40 cents, or 0.4%, to $101.61 a barrel by 08:14 GMT, while U.S. West Texas Intermediate increased 49 cents, or 0.51%, to $96.54.
Brent has gained nearly 30% from lows recorded in early August. The U.S. and Iran did not reach a permanent agreement to halt attacks, with fighting resuming later that month.
“The recent run-up in prices lays bare the market’s approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer. If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated,” PVM analyst John Evans said.
Iran Reports Attacks on 10 Ships Near Strait of Hormuz
Iran said it attacked 10 ships near the Strait of Hormuz on Wednesday following the sinking of five Iranian oil tankers by the U.S.
Iran’s Islamic Revolutionary Guard Corps said it would escalate its response if further attacks occurred.
U.S. President Donald Trump, meanwhile, said Washington could strike Iran’s Pickaxe Mountain and urged Tehran to exercise caution. Trump also said the conflict would probably continue beyond the November U.S. midterm elections.
Oil flows through the Strait of Hormuz remain substantially below pre-war levels. Before the conflict, the waterway carried around one-fifth of global oil and gas supplies, according to the supplied information.
Shipping risks have also increased in the Red Sea, where Iran-aligned Houthi militants have stepped up attacks against Saudi Arabia.
Chinese Crude Purchases Increase
In the physical crude market, dated Brent has remained above $100 since September 3, according to LSEG data cited in the supplied information. The benchmark is used to price approximately two-thirds of global oil supply.
China has increased crude purchases in recent weeks following several months of lower demand, ING analysts said. China is the world’s largest crude oil importer.
ING said a continued recovery in Chinese buying could increase the price impact of supply disruptions. A reduction in Chinese imports, by contrast, could moderate upward pressure on the market, according to the analysts.
“For months the bearish case rested on soft Chinese demand as a reliable dampener. That dampener was never structural. It was a drawdown, a buffer being spent, and buffers empty,” said David Jorbenaze, global oil market lead at commodities information provider ICIS.
The future direction of crude prices remains subject to changes in supply and demand, including the extent of shipping disruptions and Chinese purchasing activity. Analyst forecasts and assessments cited in the article represent their respective views rather than established outcomes.
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