TradingKey - International oil prices continued to advance rapidly this week. On Thursday Eastern Time, WTI crude (USOIL) broke through the $100/barrel mark, closing at $103.94, up 7.51%; Brent crude (UKOIL) surged 7.43% to $109.30, reaching an intraday high of $109.68 and approaching the $110 mark, with both major oil benchmarks rising to their highest levels since May.
WTI Crude Oil Price Daily Chart, Source: TradingView
This round of oil price gains was mainly driven by the further worsening of Middle East oil supply risks. The US and Iran recently launched a new round of retaliatory strikes against oil tankers. Iran previously stated that after US forces sank five Iranian tankers, it had attacked 10 vessels near the Strait of Hormuz, warning that if the US continues its actions, Iran will further expand its scope of retaliation.
Meanwhile, the Iran-backed Houthis seized control of Yemen's strategic port of Mokha, further raising shipping risks in the Red Sea and the Bab-el-Mandeb Strait. Transportation through the Strait of Hormuz had already been severely disrupted. The waterway handled about one-fifth of global oil and gas trade prior to the conflict, and its current throughput remains significantly below pre-war levels.
Supply tightening is gradually being reflected in the physical spot market. Data shows that oil exports from the Gulf region remain significantly lower than before the conflict, while Asian refiners have begun turning to West Africa, Canada, and South America to source crude oil, driving up physical crude premiums and shipping costs rapidly.
In addition, the latest OPEC data shows that due to war-related export disruptions and sanctions, crude oil production fell by about 640,000 barrels per day in August. US crude oil inventories also declined slightly, further reinforcing market expectations of tight short-term supply.
Judging from recent trends, WTI has surged rapidly from around $90 since early September to break above $100, while Brent crude has successively breached $100 and $105. Market focus is now shifting to whether WTI can hold above $100 and whether Brent will break further above $110. If shipping in the Strait of Hormuz and the Red Sea continues to be impacted, international oil prices could continue to rise in the short term.
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