Oil Prices Top $100 as Middle East Conflict Deepens Supply Fears

Oil prices climbed above $100 a barrel on Wednesday for the first time in six weeks, as escalating fighting involving U.S. and Iranian forces heightened concerns over oil supplies from the Middle East. Brent crude has risen about 25% since early last month as hopes for a lasting resolution to the six-month-old conflict fade, while attacks on Saudi energy facilities have raised fears of wider disruptions across the Gulf.

The surge comes as global oil inventories have already been drawn down following months of reduced Middle Eastern exports and disruptions to shipments through the Strait of Hormuz. The United States has also heavily tapped its Strategic Petroleum Reserve, which now stands at 289.7 million barrels, its lowest level since 1982. Although the International Energy Agency says global inventories remain relatively substantial, much of the stock is either in transit, committed to buyers or held in countries with limited transparency.

Analysts warn that a prolonged period of oil prices above $100 could fuel higher transport and manufacturing costs, renewed inflationary pressures and elevated interest rates. Around 10 million barrels per day of oil exports remain offline because of the conflict, according to Vortexa, while the IEA expects global oil supply to fall by 4.3 million barrels per day this year. With spare capacity and emergency reserves reduced, the market could be increasingly vulnerable to further disruptions.

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