Crude oil prices extended their climb this week, reaching the highest since May as hostilities in the Gulf continue and the prospect of peace gets even more remote.
At the time of writing, Brent crude was trading at $107.86 per barrel, and West Texas Intermediate was changing hands for $102.28 per barrel. Earlier in the week, Brent topped $108, and WTI was trading at over $103. Benchmarks have added some 13% from last week, according to Reuters. This is the sharpest weekly gain since mid-July.
“Oil’s resilience reflects a market now repricing both the duration and severity of the conflict, along with a clearer recognition of the mounting threat to regional supply,” ING commodity analysts said in a note today. “While meaningful volumes are still moving through the Strait of Hormuz, flows remain well below pre-war levels, underscoring how fragile the situation has become,” Warren Patterson and Ewa Manthey added.
The analysts also pointed to the intensifying attacks by Yemeni Houthis on Saudi energy infrastructure and tanker traffic in the Red Sea. The latest development in that part of the Middle East was the Houthis taking control of the Yemeni Red Sea port city of Mokha, which has given the group “a direct presence on the approaches to one of the world’s most vital straits,” the UN Special Envoy for Yemen told a Security Council meeting this week, as quoted by Reuters.
The Houthis’ advance along the Red Sea coast came on top of intensifying mutual attacks on tankers by U.S. and Iranian forces in the Persian Gulf, driving oil prices higher.
“With events spiralling and Iran showing it is willing to stretch this conflict as wide and as long as it can, it is becoming increasingly likely that WTI crude will retest the $119.48 high from early March,” IG’s Tony Sycamore said, as quoted by Reuters.
By Irina Slav for Oilprice.com
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