Brent crude oil prices near $110 as US-Iran tensions escalate
What's the story
Oil prices continued their upward trajectory on Friday, with both major benchmarks set to close the week above $100 per barrel for the first time since mid-May. The rise comes amid rising attacks along key Middle Eastern shipping routes, raising fears of prolonged supply disruptions. At around 7:30am IST, Brent crude was priced at $107.70 a barrel while WTI crude stood at $102.50 a barrel.
Market volatility
Prices surge on fears of prolonged supply disruptions
The latest surge in oil prices is largely due to the rising risks to oil shipments across the Red Sea and Gulf.
Iran-aligned Houthis captured Yemen's port of Mocha on Thursday, further threatening Red Sea traffic.
Meanwhile, the Strait of Hormuz remains choked with intensified tanker attacks in recent days.
These developments have added another layer of risk to the already volatile oil market.
Market influence
China plays crucial role in current oil market dynamics
The sustainability of the current oil rally is largely dependent on China, the world's largest crude importer.
According to ING analysts, China has ramped up purchases in recent weeks after a period of low demand.
This has boosted physical crude markets and could either amplify the impact of supply disruptions or temper market gains depending on future import trends.
Demand revision
OPEC revises demand growth forecast downward for 5th consecutive time
In light of these developments, OPEC has revised its forecast for world oil demand growth in 2026 to 380,000 barrels per day. This is the fifth consecutive downward revision to its demand growth forecast.
The organization also found that OPEC oil output fell by 640,000 barrels per day in August due to new disruptions from the war in Iran and a US blockade cutting shipments from the country.