Oil prices extended their rally during Asian trading on Wednesday, with Brent crude moving close to $100 per barrel as escalating U.S.-Iran tensions increased fears of further disruption to Gulf oil supplies and shipping routes.
At 21:32 ET, or 01:32 GMT, November Brent crude futures rose 1.4% to $99.32 per barrel. West Texas Intermediate, or WTI, crude futures gained 1.5% to $94.44 per barrel.
WTI was on track for a seventh consecutive session of gains, while both major oil benchmarks traded near their highest levels in several weeks.
U.S.-Iran Tensions Push Oil Prices Higher
The latest rise in oil prices followed another escalation between the United States and Iran.
The U.S. military said on Tuesday that it had destroyed five Iranian oil tankers after Iranian missile attacks targeted U.S. naval assets.
Iran later launched missiles at U.S. targets in Jordan and warned Gulf states, including Kuwait and Bahrain, against supporting American forces.
The developments added to concerns that the conflict could spread further across the Middle East.
Houthi Attacks Raise Concerns Over Saudi Energy Infrastructure
Tensions also increased after Iran-backed Houthi forces carried out attacks on Saudi Arabia.
The strikes reportedly targeted energy and economic facilities across several southern cities and left more than 70 people injured.
Saudi authorities said fires broke out at energy facilities, including the Jazan refinery.
However, the full extent of any impact on oil production and supply remained unclear.
Washington Warns Iran Over Oil Tankers
U.S. Secretary of State Marco Rubio warned Tehran that Washington would continue targeting Iranian oil tankers in response to attempted attacks on U.S. warships.
The threat has increased concerns that energy infrastructure and oil shipments could become more directly involved in the conflict.
Any sustained disruption to Iranian exports or Gulf shipping could place additional upward pressure on global crude prices.
Strait of Hormuz Disruptions Support Brent Crude
The latest escalation has added to existing disruption around the Strait of Hormuz.
The waterway is one of the world’s most important routes for global oil shipments, making any slowdown in traffic particularly significant for energy markets.
Shipping activity through the Strait has reportedly fallen sharply following Iranian warnings of retaliation against further U.S. attacks.
Iran has also said it plans to establish a maritime exclusion zone around the Strait of Hormuz.
Oil Flows Continue Despite Shipping Risks
Oil shipments through the region have declined, although they have not stopped completely.
Gulf producers have also attempted to use alternative export routes and ports to reduce their dependence on the Strait of Hormuz.
The continued movement of some crude supplies has so far prevented Brent from making a decisive break above the $100-per-barrel level.
However, the risk of a larger supply shock is increasing as the security situation deteriorates.
Goldman Sachs Sees Risk of Oil Reaching $120
The outlook for oil prices could become significantly more bullish if shipping disruptions intensify.
Goldman Sachs warned that crude prices could rise as high as $120 per barrel if attacks on Middle Eastern vessels increase and shipping conditions worsen.
A prolonged disruption to Gulf oil exports would likely tighten global supply and increase competition for available crude.
That scenario could push both Brent and WTI prices substantially higher.
$100 Brent Becomes a Key Market Level
Brent crude is now approaching the psychologically important $100-per-barrel mark.
The level has become a major focus for traders as they assess how much geopolitical risk is already reflected in prices.
A sustained move above $100 could strengthen expectations of further gains, particularly if supply disruptions become more severe.
On the other hand, continued exports through alternative routes could limit the immediate upside.
Oil Rally Revives Inflation Concerns
The sharp rise in oil prices is also creating renewed concerns about inflation.
Higher crude prices can increase transportation, manufacturing, and energy costs across the global economy.
If those costs are passed on to consumers, inflation could remain higher for longer.
That would complicate the outlook for major central banks, which are already balancing economic growth against persistent price pressures.
Oil Prices Remain Highly Sensitive to Middle East Developments
For now, the direction of oil prices will remain closely linked to developments between the United States and Iran.
Brent trading near $100 highlights how quickly geopolitical tensions are being reflected in energy markets.
Investors will continue watching the Strait of Hormuz, Gulf shipping activity, Iranian oil exports, and any further attacks on regional energy infrastructure.
A deeper disruption to oil supplies could push crude prices higher, while signs of de-escalation could reduce some of the geopolitical premium currently supporting the market.
