Oil nears $100 as Middle East tensions flare

Global oil prices climbed for a fourth consecutive session on Wednesday as renewed fighting in the Middle East intensified fears of further disruptions to crude supplies.

Brent crude futures rose 1.4% to $99.33 a barrel, moving closer to the key $100 mark. US West Texas Intermediate crude also gained 1.4% to reach $94.34 a barrel.

Brent has risen sharply since early August, gaining around a quarter as hopes for a lasting end to the six-month conflict have weakened. Fresh attacks across the region have added further pressure to already nervous energy markets.

Tensions escalated on Tuesday after Iran-backed Houthi forces in Yemen launched attacks on several Saudi cities. The developments have further drawn Saudi Arabia, a major US ally and leading oil producer, into the widening conflict.

The United States also struck several Iranian oil tankers, while Iran targeted a US military base in Jordan, according to reports.

The latest escalation has raised concerns that damage to energy infrastructure and disruptions along important shipping routes could further restrict global oil supplies.

Oil loading at the Port of Fujairah in the United Arab Emirates was at least partially halted after renewed Iranian attacks, adding to concerns over the security of regional energy shipments.

Analysts said the market was continuing to build a significant risk premium into oil prices because of uncertainty over the conflict and the prospects for renewed peace talks.

ING analysts said recent developments suggested that a restart of peace negotiations remained some distance away. They warned that oil markets were likely to continue reflecting the risk of major supply disruptions.

Saudi Arabia has reportedly diverted some crude exports away from the Strait of Hormuz in an effort to maintain supplies to international markets. However, analysts cautioned that sustained attacks on Saudi energy facilities could make it increasingly difficult to keep crude flowing smoothly.

OCBC analysts said attacks on Saudi energy infrastructure, combined with the destruction of several Iranian tankers, had heightened fears of another prolonged disruption to oil supplies.