Brent crude oil tops $101 for first time since July as fighting escalates in Persian Gulf
Oil prices extended gains on Wednesday as escalating tensions between the U.S. and Iran fueled concerns over further disruptions to Middle East energy supplies.
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Crude oil prices jumped more than 3% on Wednesday as fighting between the U.S. and Iran escalates in the Persian Gulf, raising investors' fears that energy exports through the Strait of Hormuz will fall.
Brent futures were up 3.4% at $101.25 a barrel by 11:12 a.m. ET. It is the first time the international benchmark has crossed $101 since July. U.S. West Texas Intermediate futures traded 3.6% higher to $96.38.
The U.S. military destroyed five Iranian crude oil tankers Tuesday in retaliation for attempted attacks on an American warship. The U.S. warship successfully evaded Iranian attack and no American personnel were harmed, U.S. Central Command said.
Brent crude oil futures
The escalation in the U.S.-Iran conflict, now in its seventh month, is raising the risk of oil prices surging above $120 a barrel as attacks on shipping intensify, said Daan Struyven, co-head of global commodities research at Goldman Sachs, in an interview on CNBC's "Squawk Box Asia."
Goldman's base case remains for Persian Gulf exports to gradually recover as producers adapt to disruptions, including through alternative shipping routes and eventually additional pipeline capacity.
But the recent escalation has increased the chances of a more bullish scenario in which exports fail to recover in the coming months due to attacks on tankers, Struyven said.
The U.S. and Iran largely refrained from fighting for about a month after an outburst of violence in July. Washington has pivoted to applying economic pressure on Tehran. But fighting has erupted again as Iran continues to attack commercial traffic in and around Hormuz.
