Brent and WTI crude both broke above $100 a barrel this week as fighting between the U.S. and Iran intensified and a suspected Houthi strike hit a Saudi pipeline. U.S. crude inventories also fell, though by less than analysts expected.
WTI crude jumped 8.1% to settle at $103.87 a barrel on Thursday, closing above $100 for the first time since May 19. Brent crude advanced 7.3% to settle at $108.60 a barrel, its highest close since May 15.
U.S. and Iran trade their fiercest strikes yet
The rally builds on a resurgence in military action between the U.S. and Iran after weeks of stalemate over the Strait of Hormuz. U.S. Central Command said Tuesday it had destroyed five Iranian crude oil carriers after the Islamic Revolutionary Guard Corps targeted a U.S. Navy warship. Iran's state media said Tehran responded by hitting two American vessels, eight oil tankers, 10 U.S.-backed ships and a U.S. military base in Jordan.
According to Investing.com: President Trump said Wednesday there will be a "lot more" attacks on Iranian tankers, and a Wall Street Journal report cited top advisers warning the conflict could last through the remainder of his term. Flows through the Strait of Hormuz have since fallen to a fraction of pre-war levels, keeping markets on edge over supply disruptions.
Houthi attack on Saudi pipeline adds to the surge
Fighting between Iran-backed Houthis and Saudi Arabia has also intensified. Media reports said the Houthis seized a key Yemeni port in a push for the country's Red Sea coast and the Bab el-Mandeb Strait, another major shipping route for Gulf oil producers. CNN reported more than 100 U.S. military advisers are on the ground in Saudi Arabia supporting the kingdom against the Houthis.
Separately, multiple open sources point to a Houthi attack on Saudi Arabia's East-West pipeline as the likely driver behind Thursday's price surge. Iran also struck two vessels transiting under U.S. escort in the Strait of Hormuz's southern Omani corridor with four missiles, according to the same reports.
Saudi output falls to lowest since 1990
Bloomberg News reported that Saudi Arabia's crude output dropped to its lowest level since 1990 in August, citing data the kingdom gave OPEC. Riyadh told OPEC's secretariat that production fell by 1.9 million barrels a day to 6.238 million barrels a day. OPEC also said Thursday it expects world oil demand to grow by 380,000 barrels a day in 2026, a slight downward revision from its prior forecast.
U.S. commercial crude inventories excluding the Strategic Petroleum Reserve fell by 400,000 barrels in the week of September 4 to 424.1 million barrels, the EIA said, a smaller drop than the 1.4 million barrels analysts expected. Including the SPR, overall inventories fell by 1.7 million barrels to 709.4 million barrels, the lowest level since November 1983.
Sources: Investing.com, investingLive (snippet-based)
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