By Sethuraman N R
NEW DELHI, Sept 10 – Oil prices held firm on Thursday after Brent crude breached $100 a barrel, with traders bracing for deeper supply disruptions as Iran and the United States launched their largest attacks on shipping since their six-month-old conflict began.
Brent crude futures inched lower by 0.1% to $101.10 a barrel by 0256 GMT. U.S. West Texas Intermediate crude was at $96.24 a barrel, up 0.2%.
Brent prices have surged nearly 30% from lows touched in early August as a permanent agreement between the U.S. and Iran to cease attacks never materialised, while renewed fighting began later in the month.
Iran said on Wednesday it had attacked 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers, and Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
“The tit-for-tat attacks suggest oil flows from the Persian Gulf are likely to remain disrupted for the foreseeable future,” ANZ analyst Daniel Hynes said in a client note.
Oil flows through the Strait of Hormuz, the waterway that before the war carried roughly a fifth of global oil and gas supplies, remain far below pre-war levels.
Pressure is mounting on alternative channels for Gulf oil exports, with Iran-aligned Houthi militants stepping up strikes against Saudi Arabia, threatening crude shipments via the Red Sea.
Uncertainty around actual volumes coming from the Strait of Hormuz and continued shipping disruptions are keeping physical markets tight and supporting a geopolitical risk premium in oil prices, OCBC analyst Christopher Wong said in a note.
In the physical crude oil market, the dated Brent oil benchmark, against which roughly two-thirds of supply is priced, has been above $100 per barrel since September 3, according to LSEG data.
The U.S. Energy Information Administration on Wednesday raised its oil price forecasts for this year and next, as global stockpiles drop due to the loss of Middle Eastern supply.
(Reporting by Sethuraman NR; Editing by Christopher Cushing and Lincoln Feast.)
Comments