Oil prices surge as Middle East tensions escalate

Oil prices continued their upward trajectory on Thursday, with Brent crude nearing $99 and West Texas Intermediate (WTI) exceeding $88. The market reacted to heightened tensions between the United States and Iran, exacerbated by U.S. threats of direct retaliation against Iranian civilian targets.

The surge followed reports of rebel attacks on two Saudi oil tankers in the Red Sea, an incident that could potentially open a new front in the Middle East conflict. The Brent crude contract for September delivery reached $96.12, while WTI saw a 1.51% increase to $88.14. Earlier, Brent had spiked 5% after the Houthi rebels claimed responsibility for the tanker attacks.

U.S. President Donald Trump stated that any attack on vessels in the Strait of Hormuz would be met with the destruction of infrastructure, including bridges and power plants, even near the Iranian capital. The conflict escalation, now in its twelfth day of U.S. offensive against Iran despite a June agreement, has raised concerns about the security of oil transit through the Strait of Hormuz.

Adding to the upward pressure, U.S. crude inventories fell more than expected, signaling stronger demand from the world's largest oil consumer. This occurred amidst a backdrop of declining refinery activity, though the U.S. Energy Information Administration reported an increase in crude and fuel stocks last week.