Brent Nears $100 as US-Iran Strikes Trigger Supply Crunch — SkimNews
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- Brent crude rose above $98 a barrel on Monday — its first time over that level since late July — driven by renewed US-Iran hostilities that traders said have pushed the market toward a supply "breaking point."
- The weekend's US strikes on three Iranian crude oil tankers, carried out in retaliation for Iranian missile attacks on two US Navy warships, were followed Monday by an attack on Saudi Aramco's facilities in Jizan — a "significant escalation" according to Global Risk Management's Arne Lohmann Rasmussen.
- Oil reserves outside China have fallen more than 400 million barrels since the Iran war began and volumes of oil stored in tankers at sea are at "multiyear lows," according to consultancy Energy Aspects, which said commodity funds are "turning bullish" on expectations of a reserves tipping point.
- Goldman Sachs's Daan Struyven told Bloomberg TV that Brent could reach $120 a barrel if shipping attacks "broaden and intensify," while Morgan Stanley's Martijn Rats flagged that US wholesale diesel has been trading at more than $100 a barrel above crude — a record — with European diesel hitting a similar level last week.
- Chinese buyers, who cut their oil purchases by a third early in the war, have since returned to Iraqi and Saudi crude because they cannot source enough Russian and Iranian crude, according to Sparta Commodities analyst June Goh.
- Ukraine's drone strikes on refineries in Russia's Perm and Tatarstan regions on Sunday have cut Russia's refining capacity by more than 30 percent, compounding fuel-supply strain alongside Gulf refining outages.
- A trading executive told the FT their base case is now that the Strait of Hormuz "would never return to normal" — a reference to prewar flows of 20 million barrels a day — as LSE professor Spencer Dale said "we cannot keep on drawing reserves" indefinitely.
Why it matters: Oil had retreated from $126 in April to just over $70 in July on ceasefire hopes; with that truce collapsing, traders now say the Strait of Hormuz may "never return to normal" and diesel trades at a record $100+ premium over crude. Consumers, airlines, and import-dependent economies face a refining squeeze on top of already-surging fuel costs, while the loss of more than 400 million barrels of non-China reserves leaves little buffer if shipping disruptions widen.
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