SunSirs: Brent Crude Tops $100 Per Barrel; U.S. Diesel Prices Near $6 Per Gallon

International oil prices breached the $100-per-barrel mark for the first time since July, driven by a series of attacks on oil facilities and vessels in the Middle East that threatened to paralyze already fragile supply chains.

Brent crude futures for November delivery rose 3.36% on Wednesday to settle at $101.21 per barrel, while light crude futures for October delivery on the New York Mercantile Exchange climbed 3.25% to settle at $96.05 per barrel.

Data from the American Automobile Association (AAA) shows that the average price of regular gasoline rose 7 cents overnight to $4.22 per gallon—more than $1 higher than the same time last year—while the average price of diesel reached $5.94 per gallon.

Jet fuel prices have surged, forcing US and international airlines to cut flights while raising ticket prices and various surcharges.

The US military stated on Wednesday that it had struck five Iranian oil tankers in response to an attempted missile attack on a naval warship; meanwhile, markets reacted to attacks by the Iran-backed Houthi militia that set multiple Saudi oil facilities ablaze.

Crude oil prices skyrocketed following the outbreak of war between Israel/the US and Iran, experiencing significant volatility over the subsequent six-plus months. The conflict disrupted the majority of shipping through the Strait of Hormuz—a narrow waterway that, prior to the war, handled the transport of one-fifth of the global oil supply.

For much of the period between March and May of this year, Brent crude prices fluctuated between approximately $70 and $100 per barrel. In July, prices oscillated between $72 and $102, reflecting shifting market expectations regarding whether the US and Iran could reach an agreement to allow stranded tankers to safely transport oil out of the Persian Gulf. In a research note released on Tuesday, Bank of America analysts stated: "In our view, the likelihood of reaching a lasting agreement before the U.S. midterm elections is diminishing, and even after the elections conclude, such an agreement may remain difficult to implement."

Citing the prolonged impact of supply disruptions in the Strait of Hormuz, Bank of America analysts raised their oil price forecast for the second half of the year to $83 per barrel, though they still anticipate a gradual resumption of shipping through the strait. The analysts noted that if attacks continue to choke off shipping traffic, oil prices could climb to between $95 and $120 per barrel; should major energy infrastructure be destroyed, prices could surge as high as $150 per barrel.

Negotiations for a preliminary U.S.-Iran agreement aimed at ending the conflict collapsed over the issue of control regarding the Strait of Hormuz. Iran insists on its right to set passage rules and levy tolls on vessels traversing the waterway along its coast. The U.S., conversely, seeks to maintain free passage and utilize naval blockades to restrict activity at Iranian ports and among its oil tankers.

Recent escalations in attacks by Yemen's Houthi rebels—targeting the alternative shipping routes Saudi Arabia relies on for oil transport during the conflict—could further constrain global oil supplies. (Source: Global Market Broadcast)

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