Oil hits five-month high as Gulf attacks threaten supply
Brent crude climbed to $114.72 a barrel on Friday, its highest level since May, as Tehran threatened strikes on Gulf energy and technology sites if the United…
Oil hits five-month high as renewed conflict threats put Gulf energy infrastructure and shipping routes at risk. Brent crude rose 1% on Friday morning to $114.72 a barrel, its highest level since May, after Tehran warned it would attack oil and technology facilities in the Gulf if the United States and Israel launched a new strike on Iran.
The price rise reflects concern that a conflict already in its eighth month could escalate further. The threat also comes as attacks around the Strait of Hormuz and concerns about other sources of supply add pressure to energy markets.
Iran said it would target oil facilities, undersea cables, datacentres and artificial intelligence facilities in the Gulf region if a new US-Israeli attack was launched. Richard Hunter of broker Interactive Investor said reports that Washington was considering renewed strikes after the US midterm elections, rather than diplomacy, had pushed prices higher.
“Widespread reports that the US is considering renewed military strikes on Iran after the midterm elections rather than pursuing a diplomatic route was enough for the price to pop, after what many had considered would be a brief conflict is now in its eighth month,” Hunter said.
Threats add pressure on Gulf supply routes
Tensions have risen this week. Iran’s Islamic Revolutionary Guards Corps claimed it struck four commercial ships in the Strait of Hormuz on Wednesday. The US State Department also ordered some diplomats and family members of US government employees to leave Saudi Arabia, which has faced continued attacks by Houthi rebels in Yemen.
Susannah Streeter, chief investment strategist at Wealth Club, said fears were growing that American and Israeli forces could strike Iran’s energy infrastructure after the US elections on November 3. She also pointed to attacks on Saudi facilities and the danger faced by vessels crossing the strait.
“At the same time, the attacks on Saudi Arabia’s facilities by Houthi rebels have intensified this week, and for ships attempting to cross the strait of Hormuz, it’s still a dangerous journey, with projectiles still being fired,” Streeter said.
For energy buyers, the risk is not limited to a potential attack on Iranian facilities. Disruption to shipping through the Strait of Hormuz could affect the movement of oil, while attacks on Saudi infrastructure could add to uncertainty over supplies from the region. The source reports the threats and attacks, but does not quantify any resulting change in consumer fuel costs.
Streeter also said Ukraine’s bombardment of Russian diesel refineries was adding to supply concerns. The developments point to pressure from several fronts, rather than one isolated threat.
Oil prices had traded at about $72 a barrel in February, before the Iran war began, and rose to $126 a barrel by the end of April, according to The Guardian. The latest Brent level of $114.72 remains below that peak.
The renewed escalation has also raised questions about the capacity of emergency reserves to cushion a supply shock. Al Jazeera reported that global emergency oil stocks had already been heavily drawn down since the war began on February 28. Its account cited analyst estimates of available reserves and noted that a complete closure of the Strait of Hormuz could cut off Gulf stocks, though it did not establish that such a closure had occurred.
The immediate market trigger cited by The Guardian was the prospect of renewed US military action after the elections, alongside Tehran’s warning of retaliation. Brent reached $114.72 a barrel on Friday morning.
Source: theguardian.com
