Global oil prices rose on Friday, with major crude benchmarks heading towards a weekly close above US$100 per barrel for the first time since mid-May, as escalating tensions and attacks on key shipping routes in the Middle East heightened concerns over prolonged supply disruptions.
Brent crude futures increased by US$1.05, or 1%, to US$108.68 per barrel as of 0045 GMT, while US West Texas Intermediate (WTI) crude gained 95 cents, also representing a 1% increase, to US$103.45 per barrel.
Both benchmarks had surged more than 6% during Thursday’s trading session, reflecting growing market concerns over the security of global oil supplies.
On a weekly basis, Brent and WTI were trading nearly 13% higher, putting them on course for their strongest weekly performance since the week ended 17 July.
The sharp increase in prices comes as geopolitical tensions continue to disrupt energy transportation routes across the Middle East, raising concerns about the availability and stability of global crude oil supplies.
Middle East Conflict Threatens Key Oil Shipping Routes
Oil markets have become increasingly sensitive to developments in the Middle East as attacks on shipping vessels and energy infrastructure intensify.
Iran-aligned Houthi forces reportedly seized control of Yemen’s port of Mocha on Thursday, creating additional concerns over the safety of commercial shipping operations in the Red Sea.
The development adds to existing disruptions in the Strait of Hormuz, one of the world’s most strategically important oil transportation routes, where tanker movements have been restricted following a series of attacks.
The Strait of Hormuz serves as a critical passage for crude oil exports from major Gulf producers, making any prolonged disruption a significant concern for global energy markets.
Meanwhile, attacks originating from Yemen against Saudi Arabian energy facilities have further escalated the conflict beyond Iran and the Strait of Hormuz.
Market analysts warned that the widening geographical scope of the attacks could prolong supply disruptions and increase volatility in international oil prices.
The combination of restricted shipping routes, heightened security risks and potential damage to energy infrastructure has contributed to growing uncertainty among oil traders and investors.
US-Iran Tensions Add to Market Uncertainty
Geopolitical tensions intensified further after US President Donald Trump warned that American forces could target Iran’s Pickaxe Mountain, located near the heavily damaged Natanz uranium enrichment facility.
Trump also indicated that the conflict could continue until after the November US midterm elections, adding to concerns that hostilities may persist for an extended period.
The statements came amid reports of further military exchanges involving oil tankers operating near the Strait of Hormuz.
Iran claimed that it had attacked 10 vessels near the strategic waterway on Wednesday, following reported US strikes against five Iranian oil tankers.
Iran’s Islamic Revolutionary Guard Corps subsequently warned that it would intensify its response if further attacks were carried out.
The developments have increased concerns that continued military escalation could further restrict oil shipments and place additional pressure on global energy supply chains.
Analysts Warn Oil Prices Could Rise Further
Market analysts believe crude oil prices could experience further upward pressure if the conflict continues to expand and supply disruptions remain unresolved.
IG market analyst Tony Sycamore warned that the increasingly unpredictable situation could push WTI crude towards levels last recorded in early March.
“With events spiralling and Iran showing it is willing to stretch this conflict as wide and as long as it can, it is becoming increasingly likely that WTI crude will retest the US$119.48 high from early March,” Sycamore said.
The outlook reflects concerns that prolonged disruptions to oil production facilities and shipping routes could reduce available supplies in international markets.
Higher crude prices could also increase transportation, manufacturing and energy costs, potentially adding inflationary pressure to economies that depend heavily on imported oil.
However, analysts noted that future price movements would depend on the duration of the conflict, the extent of supply disruptions and global demand conditions.
US Diesel Prices Reach Record High
The impact of rising energy prices has also become increasingly visible in the United States, where diesel prices have climbed to unprecedented levels.
According to fuel price tracking platform GasBuddy, the US national average diesel price exceeded US$6 per gallon on Thursday for the first time on record.
The increase has been attributed to tightening fuel supplies resulting from the US-Iran conflict, alongside Ukrainian attacks on Russian oil refineries.
Disruptions affecting both crude oil production and refining operations have contributed to higher fuel costs, particularly for diesel, which plays a crucial role in transportation, logistics and industrial activities.
Sustained increases in diesel prices could raise operating expenses for businesses and contribute to higher costs for goods and services.
China’s Oil Demand Remains a Key Market Factor
Despite the supply-related pressures, analysts highlighted that the sustainability of the oil price rally would depend partly on demand from China, the world’s largest crude oil importer.
China’s purchasing activity remains an important factor in determining global oil market conditions, particularly during periods of geopolitical uncertainty.
Continued strong demand from Chinese refiners could intensify the impact of supply disruptions, potentially driving international crude prices higher.
Conversely, weaker demand could limit further price increases, even if geopolitical risks remain elevated.
Market participants are therefore closely monitoring China’s crude oil imports and broader economic activity for indications of future demand trends.
OPEC Revises Global Oil Demand Growth Forecast Lower
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has lowered its forecast for global oil demand growth in 2026.
According to its latest monthly report, OPEC reduced its projected demand growth to 380,000 barrels per day, marking the fifth consecutive downward revision.
The adjustment suggests a more cautious outlook for global oil consumption amid changing economic conditions and uncertainties affecting energy demand.
Separately, a Reuters survey found that OPEC’s oil production declined by approximately 640,000 barrels per day in August.
The reduction in output adds another dimension to an already tight supply environment, particularly as geopolitical developments continue to affect oil transportation and production.
With crude prices trading above US$100 per barrel, global energy markets remain highly sensitive to developments in the Middle East.
Investors and industry participants are expected to monitor shipping security, regional military developments, OPEC production trends and demand from major consuming economies to assess the direction of oil prices in the coming weeks.
