Oil eyes $100/bbl as Middle East conflict rages on

Brent crude’s price is trading at a two-month high as the US and Iran continue to exchange fire in the Middle East.

IMAGE: Flags of the US and Iran. Getty Images

The US Central Command (CENTCOM) has been striking Iran for 12 consecutive days, targeting its maritime capabilities, missile and drone storage facilities, and air defense assets.

As of today, the US CENTCOM has redirected nine commercial vessels and disabled one to prevent ships from entering or departing Iranian ports, it said on social media platform X.

Brent crude’s price has surpassed the $98/bbl mark following the latest developments. Iran’s army claims that an oil tanker caught fire after attempting to transit a mined shipping route in the Strait of Hormuz.

Commercial traffic through the region has declined to a three-week low, and several vessels are transiting in so-called “dark mode,” the Joint Maritime Information Center (JMIC) said in an advisory note.

Fresh threats to highly critical global oil chokepoints – the Strait of Hormuz and the Bab al-Mandeb Strait – have fuelled fears of major supply disruptions in a market already depleted of reserves, according to analysts.

“Oil prices are increasingly shaped not only by observed fundamentals but by what the market believes fundamentals will look like over the next 6–12 months,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Bab al-Mandeb in the crosshairs

A commercial tanker caught fire after being struck by an unknown projectile about 70 nautical miles southwest of Al Shuqaiq, Saudi Arabia, the United Kingdom Maritime Trade Operations (UKMTO) reported.

Yemen’s Iran-aligned Houthi militants have claimed responsibility for the attack as they reinforce their maritime embargo on Riyadh’s oil exports via the Bab al-Mandeb Strait into the Red Sea.

The Houthis have struck two Saudi Arabian oil tankers, the Encelia and Layla, for allegedly violating the militant group’s blockade of the region, the group’s spokesperson Yahya Sare’e said on X.

“Sources close to the group stated that the Houthis have completed preparations to attack shipping, including the deployment of missiles and drones positioned near Bab el-Mandeb,” JMIC noted.

While Saudi Arabia has successfully rerouted most of its crude exports via the port of Yanbu to the Red Sea, fresh threats to Bab al-Mandeb Strait vessel traffic have stoked market fears of a broader supply crunch.

Risks to the Bab al-Mandeb Strait will “force tankers to enter and exit the Red Sea via the Suez Canal, adding significant time and expense to voyages to Asia,” two analysts from ING Bank noted.

With hostilities showing no signs of abating and diplomatic channels between the US and Iran frozen, US President Donald Trump has made it clear that military action will only be ramped up. He said Washington currently has “no interest” in returning to the negotiation table.

By Aparupa Mazumder

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