BY COMFORT OGBONNA
Oil prices edged lower on Thursday but Brent crude remained above $100 a barrel as traders assessed the risk of further disruptions to global energy supplies following a sharp escalation in fighting between the United States and Iran.
Brent crude futures were down 0.7% at $100.50 a barrel by 0619 GMT, while U.S. West Texas Intermediate crude fell 0.5% to $95.58 a barrel.
Despite the decline in Thursday’s session, Brent has risen nearly 30% from lows reached in early August as hopes for a lasting agreement to halt the conflict between Washington and Tehran failed to materialize and hostilities resumed later in the month.
The latest escalation has intensified concerns about the security of oil and gas shipments through the Strait of Hormuz, one of the world’s most important energy corridors.
Iran said Wednesday that it had attacked 10 ships near the Strait of Hormuz after the United States sank five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps also warned that it would escalate its response if further attacks were carried out.
U.S. President Donald Trump separately warned that Washington could target Iran’s Pickaxe Mountain, urging Tehran to exercise caution as tensions between the two countries continued to rise.
The renewed fighting has increased the geopolitical risk premium embedded in crude prices, as traders assess the possibility that further military action could restrict oil supplies from the Gulf region.
“Renewed hostilities between the U.S. and Iran, after nearly a month of relative calm, have once again lifted the geopolitical risk premium in crude oil,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.
Oil flows through the Strait of Hormuz remain well below levels recorded before the conflict. The waterway previously carried roughly one-fifth of global oil and gas supplies, making any prolonged disruption a major concern for energy markets.
The pressure on Gulf energy exports has also increased as alternative routes face growing security risks. Iran-aligned Houthi militants have stepped up attacks against Saudi Arabia, raising concerns over crude shipments moving through the Red Sea.
The combination of reduced shipping through Hormuz and threats to alternative export routes has increased uncertainty over how much crude will reach international markets in the coming weeks.
Although Brent’s move above $100 has been driven primarily by fears of prolonged supply disruptions, analysts say the strength and duration of the rally could also depend heavily on demand from China.
In the physical crude market, the dated Brent benchmark has remained above $100 a barrel since Sept. 3, according to market data. The benchmark is widely used in pricing physical crude and is linked to a substantial share of global oil supplies.
China, the world’s largest crude oil importer, has increased purchases in recent weeks after several months of relatively subdued demand, providing additional support to physical oil markets.
The recovery in Chinese buying could become increasingly important if supply disruptions persist. Stronger imports from China could absorb additional barrels available on the global market and amplify the impact of any disruption, potentially pushing prices higher.
A slowdown in Chinese purchases, however, could limit the gains in oil prices by reducing demand at a time when traders are already assessing the effects of geopolitical risks.
For now, the market remains focused on developments around the Strait of Hormuz, military activity between the United States and Iran, and the ability of Gulf producers and shipping operators to maintain crude exports.
The latest price movements show the tension between immediate supply concerns and the possibility that weaker demand could eventually limit the rally. While oil prices slipped on Thursday, Brent’s continued position above $100 highlights the extent to which geopolitical risks have reshaped expectations for global crude supplies.
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