U.S. crude and Brent crude both broke back above $100 a barrel on Thursday as fighting between Washington and Tehran escalated sharply this week. The White House has now discussed the possibility the war drags on past January 2029, contradicting President Trump's claim that it would end right after the midterms. Diesel is set to cross $6 a gallon for the first time ever.
Crude breaks back above $100
West Texas Intermediate hit a session high of $100.88 per barrel on Thursday, a level last seen in May. It later eased to trade 3.4% higher at $99.32 around 10:03 a.m. ET. Brent crude, the international benchmark, rose 3.4% to $104.69 a barrel. The London contract later touched levels close to $106, a level last traded on May 22.
Oil prices have advanced nearly 16% in September alone. Prices have also risen more than 30% from their early August low, as the market braces for a prolonged conflict in the Middle East.
White House weighs a war through 2029
Top advisers have discussed with Trump the possibility that the Iran war could drag on past Inauguration Day in January 2029, U.S. officials told the Wall Street Journal. That contradicts Trump's claim on Wednesday that the war would end immediately after the midterm elections, after months of asserting the conflict was drawing to a close only for fighting to escalate further.
Fighting between Washington and Tehran erupted this month after a period of relative calm in August. Iran has tried to attack American warships several times, while the U.S. military has destroyed at least eight Iranian tankers since Saturday in retaliation. Iran's Houthi allies in Yemen struck several energy facilities and other targets in Saudi Arabia this week, injuring more than 70 civilians.
Diesel record, traders eye $120
Pump prices hit a Labor Day record on Monday. Diesel is separately expected to cross $6 per gallon for the first time ever in the coming days. Goldman Sachs' Daan Struyven said the escalation is raising the risk that oil prices could surge above $120 a barrel as attacks on shipping intensify.
Supply routes are also under threat. The key transit route through the Strait of Hormuz remains strongly impacted by near-total closure, according to ActionForex, while Yemen's Houthis have also threatened to close the Bab el-Mandeb strait. A sustained break above $100 a barrel threatens an uncontrolled price rise that would add to inflationary pressure, ActionForex noted, with technical studies on the daily chart remaining firmly bullish.
Sources: CNBC, ActionForex
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