Global oil prices climbed back to $100 a barrel on Wednesday as the escalating conflict in the Middle East raised fresh concerns about disruptions to oil supplies.
Brent crude, the global benchmark, rose 2.3% early in the day to briefly hit $100 per barrel for the first time since July before easing slightly.
US crude also gained 1.3%, reaching about $94 a barrel.
The latest surge followed a series of military developments, including US strikes on Iranian oil tankers and attacks by Iran-backed Houthi fighters on Saudi Arabia.
Oil markets have remained volatile throughout the year as traders closely monitor the conflict and the movement of tankers through the Strait of Hormuz, a crucial route for global energy supplies.
Brent and US crude are now both more than 60% higher than they were at the start of the year, increasing energy costs and putting renewed pressure on consumers and businesses.
The rise in crude prices is already feeding into the cost of fuel and other energy products.
In the United States, the national average price of diesel reached a record $5.90 per gallon on Tuesday, according to AAA data.
The continued disruption around the Strait of Hormuz has also affected global liquefied natural gas supplies, adding to concerns about broader energy shortages.
“The combination of expensive diesel, jet fuel, bunker fuel and natural gas is particularly uncomfortable for consumers around the world, who see their disposable income shrinking,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Conflict threatens oil supplies
Tensions have intensified this month as the United States and Iran resumed hostilities, with the Strait of Hormuz at the centre of the dispute.
US Central Command said American forces struck four Iranian tankers in the Gulf of Oman and another vessel near Kharg Island, a major hub for Iran’s oil exports.
The strikes came after what Washington described as attempted ballistic missile attacks on a US Navy warship.
Oil prices also rose after Iran-backed Houthi fighters attacked Saudi Arabia, targeting oil and other infrastructure. Saudi-led forces have vowed to retaliate.
The attacks have heightened fears that the conflict could spread further across the region, threatening additional oil production and major shipping routes.
The Strait of Hormuz remains particularly important to the global energy market. Any prolonged disruption could have a significant impact on oil and gas supplies and push prices even higher.
Markets remain nervous
The renewed jump in oil prices has also unsettled financial markets, with investors worried that higher energy costs could reignite inflation and force central banks to keep interest rates higher for longer.
The S&P 500 fell 0.6% on Tuesday, although US stocks remain close to record highs.
Bond yields have also risen in recent weeks as investors assess the possibility of further interest-rate increases.
Analysts say the direction of oil prices will largely depend on how the conflict develops and whether tanker traffic through the Strait of Hormuz can return to normal.
Dennis Kissler, senior vice president of trading at BOK Financial, said traders would remain focused on how much oil is moving out of the Middle East because supply volumes could change rapidly.
With fighting spreading into the Red Sea and around the Bab al-Mandab Strait, the risk of further disruption remains high.
China’s oil demand will also be closely watched. As the world’s largest oil importer, any increase in Chinese imports could add further upward pressure on crude prices.
