Brent nears $105 as supply disruptions deepen

Traders Union
All News
Commodities
Brent nears $105

Highlights

Brent rose 3.68%, extending its move above $100.
WTI gained 3.28% as supply concerns intensified.
Iran said it attacked 10 ships after the U.S. sank five Iranian tankers.
Reduced Hormuz traffic is keeping the physical oil market tight.

Brent crude futures were trading at $104.93 a barrel, up 3.68%, while U.S. West Texas Intermediate rose 3.28%, to $99.20, according to the latest market data. The advance accelerated from earlier levels after Iran and the U.S. carried out their largest wave of attacks on shipping since the six-month conflict began, Reuters reported.

Tanker attacks reshape supply outlook

Iran said it attacked 10 vessels near the Strait of Hormuz on Wednesday after the U.S. sank five Iranian oil tankers. The Islamic Revolutionary Guard Corps also signaled that its response could intensify if further attacks occur.

The escalation has weakened expectations that traffic through one of the world's most important maritime energy corridors will quickly normalize. Oil flows through the strait remain far below levels seen before the war, leaving physical supply vulnerable to additional disruptions.

Pressure is also increasing around the Red Sea. Iran-aligned Houthi forces have stepped up attacks against Saudi Arabia and have taken control of the Yemeni Red Sea city of Mocha, further raising risks around another important shipping route.

Brent rally gains support from physical market

Brent has risen nearly 30% from its early-August lows after efforts to establish a lasting halt to U.S.-Iran attacks failed and fighting resumed later that month. Dated Brent, a physical-market benchmark used to price much of the world's crude supply, has remained above $100 since Sept. 3.

China is becoming another important part of the equation. The world's largest crude importer has increased purchases in recent weeks after months of weaker demand, adding support to physical crude markets. Continued Chinese buying could magnify the price impact of any further supply losses.

Oil market shifts toward prolonged disruption

The latest price move suggests traders are assigning greater weight to the possibility that supply constraints will persist. Brent at $105 and WTI at $100 put both benchmarks well above levels seen before the latest escalation.

The next direction will depend heavily on two factors: whether tanker traffic through Hormuz begins to recover and whether Chinese crude purchases remain strong. Continued attacks combined with firm Asian demand would leave the market with a smaller cushion against further supply losses, increasing the risk that elevated prices persist.

Earlier, we reported that Iran threatens Gulf exclusion zone as U.S. conflict escalates.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.