Oil prices stay near six-week highs as US-Iran attacks disrupt shipping

Oil prices moved closer to $100 a barrel on Monday as attacks involving the United States and Iran kept crude flows through the Middle East low and pushed shipping concerns to the center of the market.

Brent crude futures rose $1.19, or 1.2%, to $97.47 a barrel by 1214 GMT after reaching $97.93, their highest level since July 24. U.S. West Texas Intermediate rose 78 cents to $92.26, near its own six-week high. Brent had gained about 8% the previous week, while WTI rose nearly 10% after the attacks resumed.

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major escalation

The latest escalation included U.S. strikes on three Iranian oil tankers on Saturday, according to U.S. Central Command. Iran’s Islamic Revolutionary Guard Corps said it had targeted three tankers using unauthorized routes through the Strait of Hormuz, along with three U.S.-linked vessels elsewhere. Maritime intelligence firm Marisks called the attacks a “major escalation,” saying commercial tankers were being used deliberately as tools of economic pressure.

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Commercial tankers are now being deliberately used as instruments of reciprocal economic pressure, substantially weakening the previous distinction between military confrontation and commercial shipping.

A Saudi-owned tanker was attacked by Iran a week earlier, and Saudi Arabia said two seafarers died. Oman said Monday that it had evacuated 16 crew members. In Saudi Arabia, the Jazan oil refinery was attacked, the Financial Times reported, citing two people familiar with the matter. The damage was still being assessed.

Kpler data showed an average of 10 commodity ships passed through the Strait of Hormuz each day over the past 10 days, the lowest level since May. “If tanker traffic begins to slow materially, the market could price in a much larger supply shock. And there are already signs that this is happening,” said Priyanka Sachdeva of Phillip Nova. Goldman Sachs said prices could reach $120 a barrel if attacks on shipping increase. Iran also said a restricted zone would be announced outside the strait, while OPEC+ kept its October output policy unchanged.

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If tanker traffic begins to slow materially, the market could price in a much larger supply shock. And there are already signs that this is happening.