Oil prices jumped six per cent yesterday, with both major benchmarks trading at more than $100 a barrel as the biggest spike in attacks on shipping since the Iran war began fed worries among traders about further disruptions to already tight supplies.
Brent crude futures hit their highest since mid-May, rising $5.87, or 5.8pc, to $107.08 a barrel. US oil topped $100 a barrel for the first time since May as West Texas Intermediate crude futures rose $5.57, or 5.8pc, to $101.62.
Both benchmarks have surged by more than 30pc from lows touched in early August as a permanent agreement between the US and Iran to cease attacks never materialised and fighting resumed.
Iran-aligned Houthis seized control of Yemen’s port of Mokha yesterday, posing further threat to Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.
“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.
US President Donald Trump warned that the US may hit Iran’s Pickaxe Mountain, located near its heavily damaged Natanz uranium enrichment facility, and said the war would likely last beyond the November midterm elections.
Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers.
Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
While fears of prolonged and more severe supply disruptions in the Gulf have lifted Brent above $100, analysts say the durability of the rally will hinge on China.
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.
If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, while a pullback in imports could temper market gains, ING said.
“For months the bearish case rested on soft Chinese demand,” said David Jorbenaze, global oil market lead at commodities information provider ICIS.
Opec yesterday lowered its forecast for world oil demand growth in 2026 to 380,000 barrels per day, a copy of its monthly report showed, marking the fifth straight downward revision.
The change represents Opec’s fifth consecutive monthly reduction to its 2026 demand growth projection.
Opec continues to forecast higher oil consumption than the International Energy Agency.
The IEA expects global oil demand to decline in 2026, citing a greater impact from the Iran war on consumption patterns.
Opec’s report also raised the producer group’s forecast for global oil demand growth in 2027.
Opec oil output fell by 640,000 bpd in August, a Reuters survey found, as Saudi exports faced new disruptions due to the war in Iran and a US blockade cut Iran’s shipments.
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