Brent crude climbed above the $100-a-barrel mark on Thursday for the first time in two months as escalating geopolitical tensions in the Middle East heightened fears of supply disruptions, extending a sharp rally in global oil prices.
The international benchmark rose above $100 a barrel, taking its weekly gain to around 14%, while West Texas Intermediate (WTI) traded near $92 a barrel. The latest leg of the rally follows attacks by Iran-backed Houthi militants on Saudi oil tankers in the Red Sea, a key shipping route that has emerged as an alternative to the Strait of Hormuz.
The move was further supported after US President Donald Trump warned of "major military punishment" for Iran and the Houthis if further attacks on vessels occur in the Red Sea. According to Axios, Trump is also considering a "massive attack" on Iran, raising concerns that the conflict could intensify further.
The oil market is simultaneously grappling with attacks on the Caspian Pipeline Consortium (CPC) terminal on Russia's Black Sea coast, a major export route for Kazakhstan's crude. Together with months of geopolitical unrest, these disruptions have tightened global oil inventories and increased the risk of a supply crunch.
The Red Sea has become increasingly critical for Saudi Arabia's oil exports, allowing the kingdom to bypass the Strait of Hormuz, where shipping has already been disrupted by heightened tensions between the US and Iran. Traders said some Asian buyers are now discussing alternative shipping routes with Saudi Aramco, including moving cargoes through the Suez Canal and around Africa following the Houthi attacks.
Meanwhile, the US launched its 13th consecutive day of strikes on Iran, while Tehran warned it could retaliate against energy infrastructure across the region if Washington escalates military action. Despite the growing security risks, two Chinese tankers carrying Saudi crude reportedly passed through the Bab el-Mandeb chokepoint on Thursday.
For markets, oil's climb above $100 revives concerns over higher fuel costs, persistent inflation and slower economic growth. The impact could be particularly significant for major oil-importing nations such as India, where sustained high crude prices typically widen the trade deficit, pressure the rupee and increase inflation risks.
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