Crude oil prices held near recent highs after rallying sharply earlier this week, with gains driven by an escalation in the U.S.-Iran conflict and intensifying attacks on tankers in the Persian Gulf. Iran reported hits on U.S. warships and tankers in the Persian Gulf, while the U.S. said it had hit ten Iranian tankers.
At the time of writing, Brent crude was trading at $101.04 per barrel and West Texas Intermediate at $96.09 per barrel. Iran has signaled U.S. attacks on its tankers will prompt further escalation. The United States is also in the mood to escalate.
“Iran continues to try to hit U.S. naval ships, and for every time they do that or try to do that, they’re going to lose tankers,” U.S. Secretary of State Marco Rubio said earlier this week.
Meanwhile, a tanker carrying Iraqi crude was reported to have suffered a drone hit in the Persian Gulf, deepening worries about the flow of oil in the region, prompting analysts to warn of extended disruption.
“The tit-for-tat attacks suggest oil flows from the Persian Gulf are likely to remain disrupted for the foreseeable future,” ANZ analyst Daniel Hynes said in a note, as quoted by Reuters.
“The risk is that escalation starts leading to meaningful disruptions to Strait of Hormuz flows. Oil flows have surprised to the upside in recent weeks, but the market could tighten more sharply if ongoing escalation translates into disrupted oil flows once again,” ING commodity analysts wrote in a note earlier today.
President Trump, meanwhile, accused Iran of trying to influence the U.S. midterm elections in November, saying the war would end right after them. “I think war is going to end immediately after the election because they can’t hold out any longer. They’re desperate to try and affect the election,” Trump said earlier this week.
Reuters, however, reports that some of Trump’s closest advisers, including Vice-President JD Vance and Secretary Rubio, warned him the war could extend for years, up to the end of Trump’s presidential term in 2029.
By Irina Slav for Oilprice.com
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