Brent holds above $100 as Hormuz tanker attacks deepen supply fears
Brent crude rose to $101.61 a barrel as attacks on shipping near the Strait of Hormuz kept oil flows far below pre-war levels.
Oil prices climbed on Thursday, building on the previous session's push above $100 a barrel, after Iran and the United States exchanged their heaviest attacks on shipping since their six-month-old conflict began.
Brent crude futures were up 40 cents, or 0.4%, at $101.61 a barrel by 0814 GMT, while U.S. West Texas Intermediate gained 49 cents, or 0.51%, to $96.54. The dated Brent benchmark, used to price roughly two-thirds of global supply, has held above $100 since September 3, according to LSEG data.
Brent has risen nearly 30% from lows touched in early August, as a permanent agreement between Washington and Tehran to halt attacks failed to take hold and fighting resumed 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," said PVM analyst John Evans.
U.S. President Donald Trump warned that Washington may strike Iran's Pickaxe Mountain, urged Tehran to exercise caution, and said the war will likely continue beyond the November midterm elections.
Iran said it attacked 10 ships near the Strait of Hormuz on Wednesday, after the U.S. sank five Iranian oil tankers. The Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
Flows through the Strait of Hormuz, which before the war carried about a fifth of global oil and gas supplies, remain far below pre-war levels. Pressure is also building in the Red Sea, where Iran-aligned Houthi militants have intensified strikes against Saudi Arabia.
Analysts say the durability of the rally will hinge on China. The world's largest crude importer has stepped up purchases in recent weeks after months of subdued demand, boosting physical crude markets, ING analysts said in a note. Continued recovery in Chinese buying could amplify the impact of any supply disruptions and push prices higher, while a pullback in imports could temper gains.
"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.