Singapore: Brent crude oil remained above $100 a barrel on Thursday as new attacks on shipping in and around the Gulf raised fears that disruption to Middle Eastern oil supplies could last longer.
Brent crude futures were trading at about $101.10 a barrel early Thursday, while US West Texas Intermediate crude was around $96.24. Brent had risen nearly 30 percent from its early August low and moved above $100 for the first time since July on Wednesday.
The latest rise followed a major escalation in attacks on oil tankers and other vessels involving the United States and Iran.
The US military said it destroyed five Iranian crude oil carriers on September 8 after the Islamic Revolutionary Guard Corps targeted a US Navy warship with ballistic missiles. Four of the tankers were destroyed in the Gulf of Oman and another near Iran's Kharg Island, according to the US Central Command.
Iran then said on Wednesday that its forces had attacked 10 vessels near the Strait of Hormuz in retaliation. The Islamic Revolutionary Guard Corps said the targets included two US vessels and eight oil tankers.
The full extent of the damage from the Iranian attacks has not been independently established. The United States has not confirmed Iran's claims that its vessels were successfully hit.
The attacks have added to an already serious disruption in one of the world's most important oil shipping routes.
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Before the current conflict, roughly one fifth of the world's oil and liquefied natural gas supplies passed through the waterway.
Shipping traffic has now fallen sharply. Preliminary tracking data showed only seven vessel transits through the strait on Wednesday, compared with 12 on Tuesday and an average of 14 over the previous 10 days.
Four vessels left the strait and three entered. One of the vessels leaving, the very large crude carrier Finland Prosperity, was carrying nearly two million barrels of crude oil. No liquefied natural gas tankers were recorded leaving the strait that day.
The tracking figures may not capture ships that are travelling with their tracking systems turned off, so they should not be treated as a complete measure of all shipping activity.
The disruption is occurring after months of reduced oil production and exports from the Middle East. The US Energy Information Administration estimated that crude oil production shut in across the Middle East averaged 6.7 million barrels a day in August, compared with 5 million barrels a day in July.
The agency's September forecast assumed that restrictions on Middle Eastern oil flows would continue and estimated that production shut ins would average about 5.7 million barrels a day during the final three months of this year.
Global oil inventories have also been falling as the conflict limits supplies. The Energy Information Administration estimates that global inventories have fallen by about 400 million barrels so far this year and expects some restrictions on Middle Eastern oil exports to continue through the end of 2026.
The pressure is not limited to the Strait of Hormuz.
Attacks by Iran aligned Houthi forces have also threatened Saudi oil infrastructure and shipping routes through the Red Sea and the Bab el Mandeb Strait. Saudi Arabia has alternative routes for moving oil to international markets, including routes through the Red Sea and Suez Canal, but these routes are longer and can be more expensive.
The International Maritime Organization has also reported a growing number of attacks involving commercial shipping in the wider Middle East region. The organisation said 73 incidents had been confirmed as of September 8, with 21 seafarers killed.
The continuing attacks are creating uncertainty for oil companies, shipping operators and governments. Even though some oil continues to move through the region, the security risks are disrupting normal shipping patterns and increasing uncertainty for tanker operators.
Higher oil prices could also increase costs for consumers and businesses around the world. Fuel prices affect transport, manufacturing, food production and air travel, meaning a prolonged disruption could add to inflation in many countries.
For now, the central question for the oil market is how long the disruption will continue. The latest escalation has reduced confidence that normal shipping through the Gulf will return soon, while the exact volume of oil still moving through the Strait of Hormuz remains uncertain.
Oil prices are likely to remain sensitive to new military and diplomatic developments. A reduction in attacks and a return of commercial shipping could ease pressure on prices, while further attacks on tankers, oil facilities or major shipping routes could increase concerns about global supplies.