Brent Crude Nears $110 as Middle East Shipping Attacks Stoke Supply Fears

Oil prices advanced to their highest levels in four months on Friday, with the global benchmark Brent crude nearing $110 per barrel, as escalating military confrontations in the Middle East intensified concerns over potential crude supply disruptions. Both major crude benchmarks are on track for their largest weekly gains since early July.

Price Action

According to market data from 20:32 ET (00:32 GMT), key oil futures contracts showed significant gains:

• Brent oil futures rose 0.6% to $108.21 a barrel, after touching an intraday high of $109.97, its highest point since early May.
• West Texas Intermediate (WTI) crude futures, the U.S. benchmark, gained 0.55% to trade at $103.08 a barrel.

For the week, Brent was up 12.4% and WTI had surged 12.7%, reflecting a sharp increase in the market's perception of risk.

Geopolitical Flashpoints Fuel Rally

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The price surge is primarily driven by a higher geopolitical risk premium as traders react to heightened conflict in two of the world's most critical oil transit chokepoints.

An escalation between the United States and Iran has rattled markets. According to reports, Iran stated it had attacked 10 ships near the Strait of Hormuz, a vital passageway for a significant portion of global oil shipments. The U.S. said it retaliated by sinking five Iranian tankers in what is being described as some of the most severe fighting in months.

Separately, Yemen’s Iran-backed Houthi group has reportedly seized control of the port city of Mocha. This development gives the group more leverage over the Bab el-Mandeb Strait, another critical maritime route. The group has been observed attacking ships in the area and launching strikes on Saudi energy infrastructure, further threatening regional stability.

Market Implications

The concurrent threats to both the Strait of Hormuz and the Bab el-Mandeb Strait raise the prospect of severe, widespread disruptions to the global flow of crude oil. Consequently, energy traders are pricing in a substantially higher risk premium to account for the heightened uncertainty and the potential for a tighter market if supply lines are constrained.