Brent crude held above the $100-a-barrel mark on Thursday even as prices eased slightly, with escalating attacks on shipping around the Gulf raising fresh concerns about disruptions to global oil supplies.
Brent futures slipped 0.7% to $100.50 a barrel by 0619 GMT, while U.S. West Texas Intermediate crude fell 0.5% to $95.58.
The latest gains extend a sharp recovery in oil markets. Brent has climbed almost 30% from its early-August lows as hopes for a lasting ceasefire between the United States and Iran have faded and fighting has intensified again.
Iran said Wednesday that it had attacked 10 ships near the Strait of Hormuz after the United States sank five Iranian oil tankers. The Islamic Revolutionary Guard Corps also warned that its response would intensify if further attacks were carried out.
U.S. President Donald Trump, meanwhile, warned Tehran that Washington could target Iran’s Pickaxe Mountain and urged the country to exercise caution.
The renewed conflict has added a fresh geopolitical premium to crude prices after a period of relative calm.
“Renewed hostilities between the U.S. and Iran, after nearly a month of relative calm, have once again lifted the geopolitical risk premium in crude oil,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.
The Strait of Hormuz remains a major pressure point. Before the conflict, the strategic waterway handled about one-fifth of global oil and gas supplies, but flows have since fallen sharply.
Alternative export routes are also coming under strain. Iran-aligned Houthi militants have increased attacks targeting Saudi Arabia, putting additional pressure on crude shipments moving through the Red Sea.
With traders increasingly focused on the possibility of prolonged supply disruptions, the next major question is whether demand will be strong enough to sustain the rally.
China is likely to play a central role. The world’s largest crude importer has increased purchases in recent weeks following a period of weaker demand, helping to strengthen physical oil markets, according to ING analysts.
Dated Brent, a key physical-market benchmark used to price roughly two-thirds of global crude supplies, has remained above $100 since September 3, based on LSEG data.
A continued recovery in Chinese buying could magnify the impact of supply losses and push crude prices higher. A renewed slowdown in imports, however, could take some heat out of the market and limit further gains.
For now, traders are balancing two opposing forces: the threat of a deeper supply shock from the Gulf and uncertainty over how much additional crude demand China will bring to the market.
