Brent tops $100 for first time since July as supply risks deepen

Highlights

Brent crossed $100 for the first time since July 24.
Hormuz oil flows have recently fallen below 2 million bpd.
Attacks on Saudi facilities add risks to Red Sea shipments.

Brent crude futures were trading at $99.72 a barrel, up 1.84%, while U.S. West Texas Intermediate futures rose 1.26% to $94.20, according to the latest market data. Earlier in the session, Brent crossed $100 as renewed attacks and sharply reduced traffic through Hormuz pushed traders to price in greater supply risk, Reuters reported.

Supply fears spread beyond Hormuz

The latest rally followed attacks by Iran-backed Houthis on Saudi energy facilities this week. Oil installations were set ablaze, raising the possibility that disruption could extend to crude shipments through the Red Sea.

That route has become increasingly important as traffic through the Strait of Hormuz has fallen sharply since the U.S.-Iran war began on Feb. 28. Around 8 million to 9 million barrels a day moved through Hormuz in the week before fighting resumed on Aug. 30, according to Rystad Energy. More recently, flows have dropped below 2 million barrels a day.

Brent has gained roughly 25% since early August as expectations for a lasting resolution to the conflict have weakened. The changing outlook has prompted Goldman Sachs, Bank of America, and HSBC to raise their oil-price forecasts.

Global supply buffers come under pressure

Higher production from the U.S., Canada, and Guyana offers some protection against disruptions in the Middle East, but it may not fully compensate for lost regional barrels. The International Energy Agency last month projected global oil supply would decline by 4.3 million barrels a day, or about 4%, this year.

At the same time, OPEC faces internal pressure over future production capacity. Iraq is seeking a higher production baseline as the group reviews how much individual members can sustainably pump next year. The review comes as the organization also faces questions about cohesion following the United Arab Emirates' withdrawal and Venezuela's consideration of its future membership.

The $100 threshold raises the economic stakes

Brents move through $100 matters beyond energy markets. A prolonged period of elevated crude prices could raise fuel and transportation costs, complicate the inflation outlook, and influence expectations for monetary policy.

The immediate issue is whether disrupted Middle Eastern exports can recover. With Hormuz flows recently below 2 million barrels a day and attacks now threatening Saudi infrastructure and Red Sea shipping, the market has fewer dependable routes for replacing lost supply. That leaves oil prices increasingly sensitive to each new escalation.

Earlier, we reported that Iran strikes vessels in Strait of Hormuz.

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