Crude oil prices extended their climb this week, reaching their highest levels since May as hostilities in the Persian Gulf region intensify and prospects for peace diminish. At the time of writing, Brent crude was trading at $107.86 per barrel, while West Texas Intermediate was trading at $102.28 per barrel. Earlier in the week, Brent had topped $108, and WTI had traded above $103.
According to Reuters, benchmarks have gained approximately 13 percent from the previous week, marking the sharpest weekly gain since mid-July. Analysts at ING Commodity Research attributed the oil market's strength to repricing both the duration and severity of the ongoing conflict, coupled with a clearer recognition of mounting threats to regional energy supplies. Warren Patterson and Ewa Manthey from ING noted that while meaningful volumes of crude continue flowing through the Strait of Hormuz, current flows remain well below pre-war levels, indicating the fragility of the situation.
The analysts highlighted intensifying attacks by Yemeni Houthis on Saudi energy infrastructure and tanker traffic in the Red Sea as a significant market driver. A major development occurred when Houthis took control of the Yemeni Red Sea port city of Mokha, providing the militant group with direct access to approaches of one of the world's most vital maritime chokepoints. The UN Special Envoy for Yemen indicated during a Security Council meeting that this advance represents a concerning escalation.
The Houthis' coastal expansion in the Red Sea has coincided with intensifying mutual attacks between U.S. and Iranian forces on tankers in the Persian Gulf, further supporting higher crude valuations. Technical analysis suggests additional upside potential. Tony Sycamore from IG stated that with events escalating and Iran demonstrating willingness to prolong and expand the conflict, WTI crude may retest the $119.48 high recorded in early March.
This assessment reflects market expectations that geopolitical risks in the region will continue driving energy prices higher in coming weeks.
Source: oilprice.com