Oil nears $100 as Middle East attacks stoke supply fears

Oil prices rose for a fourth consecutive session on Wednesday, gaining more than $1 in early trading as renewed attacks across the Middle East heightened concerns over disruptions to crude supplies.

Brent crude futures rose 1.4% to $99.33 a barrel by 0212 GMT, while U.S. West Texas Intermediate crude gained 1.4% to $94.34 a barrel, as per Reuters.

Brent has risen by about a quarter since early August as hopes for a permanent resolution to the six-month-old war have faded and fighting has intensified again, bringing prices close to the key $100-a-barrel threshold. Brent later climbed to around $99.50, its highest level since late June.

The conflict escalated on Tuesday when Iranian-backed Houthi forces in Yemen launched attacks on several Saudi cities, further drawing the U.S. ally into the war. U.S. forces also struck multiple Iranian oil tankers, while Iran targeted a U.S. military base in Jordan.

“Recent developments only reinforce the view that we are still some way from a restart in (peace) talks. In the meantime, the market is likely to continue to price in a sizeable risk premium,” ING analysts said in a note.

The latest attacks threaten to deepen disruptions to Middle Eastern oil supplies, which are already under pressure from strikes on regional energy infrastructure and key shipping routes. Shipping through the Strait of Hormuz has fallen sharply, with only six commodity vessels passing through the waterway on Tuesday, compared with a 10-day average of about 12, according to preliminary Kpler data.

Saudi Arabia has diverted some oil exports away from the Strait of Hormuz, but analysts warned that sustained attacks on the kingdom could complicate efforts to maintain crude flows to global markets.

“Iran's attacks on Saudi energy facilities and the subsequent destruction of five Iranian tankers raised concerns about another prolonged disruption to oil supplies,” OCBC analysts said in a note.

By Tamilla Hasanova