Benchmark Brent crude oil futures rose past $100 a barrel on Wednesday, breaching the symbolic barrier for the first time since July 24 as intensifying conflict in the Middle East fuelled growing concern about oil flows from the region.
Brent crude futures rose $2.15, or 2.2%, to $100.07 a barrel by 0721 GMT, while U.S. West Texas Intermediate crude was up $1.70, or 1.83%, at $94.73 a barrel.
Brent crude prices have risen by a quarter since early last month as hopes fade for a permanent resolution to the six-month-old U.S.-Iran conflict.
With the US-Iran conflict now in its seventh month and showing no sign of calming despite White House claims of an imminent deal, investors are growing increasingly anxious that the Federal Reserve will have to hike interest rates to cap surging consumer prices.
The two foes are locked in a stalemate six months into the war, with Tehran maintaining a stranglehold on the Strait of Hormuz, a vital shipping route for the world’s oil and gas, and Washington pushing a campaign to choke the Islamic republic’s ports and economy.
Iran said Wednesday it had struck a US military base in Jordan following American attacks on its vessels in the Strait of Hormuz, which itself was in retaliation for ballistic missile launches at a US warship.
Tehran also said it would target oil tankers off Kuwait and Bahrain and urged crews to leave their ships, according to the IRNA state news agency.
That came after Saudi Arabia and Iran-backed Houthis in Yemen exchanged strikes, with the rebels targeting oil facilities in an offensive towards the Red Sea’s Bab al-Mandab chokepoint.
The waterway is an increasingly important route for Saudi oil with the Strait of Hormuz shut.
Both main crude contracts jumped more than one percent Wednesday, with Brent hitting as high as $99.68 and a whisker away from the $100 last touched in July. West Texas Intermediate was heading towards $95 for the first time since June.
The surge in energy costs has kept inflation elevated globally and is putting pressure on central banks to hike borrowing costs, with the European Central Bank tipped to do so Thursday.
All focus is on the release of the US consumer price index Friday, which is seen as the key to whether the Fed lifts rates next week or not.
“The continuing conflict in the Middle East is keeping concerns over supply disruptions, and that in turn is worrying investors about the inflationary consequences of elevated oil prices,” said Fawad Razaqzada, a market analyst at FOREX.com.
“For the Fed, the combination of resilient US employment and renewed pressure from energy prices are both hawkish signals.
“A sustained rise in oil prices would risk reversing the progress on inflation that policymakers have been relying on to justify lower interest rates, while simultaneously squeezing consumers and businesses.”
The prospect of borrowing costs heading up is weighing on equities, with all three main indexes dropping on Wall Street.
Asian markets fluctuated, though tech firms continued to enjoy a recovery from July’s rout as the AI boom returns to the fore.
Seoul led the gainers as chipmaker SK hynix rallied more than three percent.
Shanghai, Wellington, Taipei, Bangkok and Manila also advanced, though Hong Kong, Tokyo, Sydney, Singapore, Mumbai and Jakarta were down.
London, Frankfurt and Paris fell at the open.
On currency markets, the yen strengthened to around 152.95 per dollar after seeing Tuesday’s rally — which saw it within a whisker of its 2026 high — pared towards the end of the day.
Key Figures At Around 0715 GMT
West Texas Intermediate: UP 1.4 per cent at $94.37 per barrel
Brent North Sea Crude: UP 1.6 per cent at $99.49 per barrel
Tokyo – Nikkei 225: DOWN 0.2 per cent at 65,142.78 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 per cent at 25,232.38
Shanghai – Composite: UP 0.3 per cent at 3,951.51 (close)
London – FTSE 100: DOWN 0.3 per cent at 10,775.68
Dollar/yen: DOWN at 153.30 yen from 153.96 yen on Tuesday
Euro/dollar: UP at $1.1639 from $1.1627
Pound/dollar: UP at $1.3559 from $1.3541
Euro/pound: DOWN at 85.84 pence from 85.85 pence
New York – Dow: DOWN 1.2 per cent at 52,786.07 (close)
AFP
