Oil prices hit the $100 per barrel mark early on Wednesday in Asian trade as the ongoing crisis in the Middle East has diminished hopes of U.S.-Iran talks and a return to normal oil flows soon.
As of early morning trade in Europe on Wednesday, the international benchmark, Brent Crude, jumped by 2.25% to top $100 per barrel. At $100.12, this was the highest level Brent has reached since July 24, when the first of several re-escalations in the Middle East hiked oil prices.
The U.S. benchmark, WTI Crude, was also rallying, rising by 1.80% to $94.67 and headed to the $95 per barrel mark.
The price rally this week has been triggered by the renewed hostilities between the United States and Iran, with the U.S. military destroying Iranian oil tankers and Iran and its Yemen-based allies, the Houthis, targeting energy infrastructure in the region, including in Saudi Arabia on Tuesday.
U.S. Central Command (Centcom) announced late on Tuesday that American forces had destroyed five Iranian crude oil carriers, once again claiming that it was in response to the IRGC targeting a U.S. Navy warship with ballistic missiles. Four of the carriers, M/T Kaviz, M/T Charminar, M/T Horizon 1, and M/T Riesco, were destroyed in the Gulf of Oman. One of the carriers, M/T Derya, was struck near Kharg Island.
Iran retaliated by firing ballistic missiles towards Jordan, while also warning that vessels in the Persian Gulf could be targeted.
Iran targeted U.S. forces in Jordan, with Jordan’s Armed Forces confirming that 20 ballistic missiles had been fired from Iranian territory. Jordan’s Armed Forces intercepted and destroyed 18 of them and reported that the remaining two fell on unpopulated areas and there were no casualties recorded.
“Recent developments only reinforce the view that we’re still some way from a restart in talks. In the meantime, the market is likely to continue to price in a sizeable risk premium,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note early on Wednesday.
By Tsvetana Paraskova for Oilprice.com
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