Oil Price Today Nears $100 as US-Iran Tanker Attacks Threaten Hormuz Supply

Key Takeaways

• Brent crude traded near $97 a barrel after reaching $98.06, while WTI climbed more than 1% to approximately $92.58.
• The United States disabled or destroyed three Iranian crude tankers after Iranian forces launched missiles toward US Navy vessels.
• Iran subsequently targeted three additional tankers accused of using an unauthorized route through the Strait of Hormuz.
• Shipping disruptions and an attack on Saudi Arabia’s Jazan refinery have increased the risk premium embedded in oil prices.
• OPEC+ kept its October production targets unchanged, leaving the market with limited immediate supply relief if the conflict intensifies.

The oil price today moved closer to $100 a barrel as escalating attacks on tankers and energy infrastructure intensified concerns about another major disruption to supplies moving through the Strait of Hormuz.

Brent crude traded around $97.30 after reaching an intraday high of $98.06, its strongest level in approximately six weeks. West Texas Intermediate rose about 1.2% to $92.58 a barrel during Asian trading, extending a weekly advance of almost 10%.

The latest increase followed another exchange of attacks between the United States and Iran. Both sides have targeted vessels connected to the region’s oil trade, raising the possibility that commercial shipping could face further restrictions, higher insurance costs and longer transit delays.

US Forces Target Three Iranian Oil Tankers

The latest escalation began after Iran’s Islamic Revolutionary Guard Corps launched ballistic missiles toward two US Navy warships.

According to US Central Command, the American vessels avoided the attacks and no US personnel were injured. US forces subsequently targeted three tankers that officials said were linked to a network financing the IRGC.

Two vessels, the M/T Downy near Kharg Island and the M/T Stark 1 near Jask, were permanently disabled. A third empty tanker, identified as the M/T Kylo or Noxen, was destroyed in the Gulf of Oman after its crew was instructed to abandon the vessel.

CENTCOM described the operation as a response to attacks against US forces and warned that additional Iranian oil assets could be targeted if hostilities continue.

The strikes add a new dimension to the conflict. Previous military operations had already affected production facilities, ports and shipping routes, but direct attacks against crude carriers threaten the physical infrastructure used to move oil to international customers.

Even when a tanker does not suffer a major spill, removing vessels from service can reduce available transport capacity and increase the cost of moving oil through the Gulf.

Iran Retaliates Against Commercial Tankers

Iran reportedly responded by targeting three tankers that it accused of using an unauthorized passage through the Strait of Hormuz.

ANZ Research said the attacks followed US action against the Iranian vessels and increased the probability of a prolonged confrontation involving limited but recurring military operations.

Iran has also proposed creating a restricted shipping zone near the strait. Vessels entering the area without authorization could face sanctions or military action, according to Iranian officials.

The United States has rejected Iran’s attempt to impose new controls and said it would continue protecting maritime traffic. The conflicting positions create considerable uncertainty for tanker operators because compliance with one side’s instructions could potentially be viewed as a violation by the other.

The result is a higher geopolitical premium in crude prices. Shipping companies must account for the possibility of vessel damage, crew safety risks and sudden changes to approved transit routes.

Strait of Hormuz Traffic Faces Renewed Disruption

The Strait of Hormuz is one of the world’s most important energy corridors, connecting the Persian Gulf with the Gulf of Oman and international markets.

Before the current conflict, approximately 20 million barrels per day of oil moved through the waterway. Earlier disruptions reduced average flows to about 2.7 million barrels per day during March, April and May, according to the International Energy Agency.

Oil supplies began recovering as producers used alternative routes, drew down inventories and increased exports outside the Middle East. However, the latest tanker attacks threaten to reverse part of that progress.

Recent vessel traffic through the strait reportedly declined to a moving average of approximately 10 ships per day, the lowest level since May. Maritime authorities have recorded 27 projectile-related incidents in the region since July.

The decline in traffic does not mean that all oil exports have stopped. Some tankers continue to operate through routes closer to Oman, while producers have increased the use of pipelines that bypass the strait.

Nevertheless, reduced tanker traffic makes the market more vulnerable to additional attacks or operational delays.

Saudi Refinery Attack Adds to Supply Concerns

Oil prices also received support from reports of another attack on Saudi Aramco’s Jazan refinery.

The facility, located near Saudi Arabia’s border with Yemen, can process approximately 400,000 barrels per day. It was previously hit in July, disrupting regional refined-product exports.

The extent of the latest damage has not been independently confirmed. Even without a prolonged shutdown, repeated attacks on the facility reinforce concerns about the security of refineries, storage terminals and pipelines across the region.

The distinction between crude supply and refined-product supply is important. Global crude inventories may help absorb a temporary production disruption, but shortages of diesel, jet fuel or gasoline can still develop if refineries are unable to operate or ship products.

Diesel markets are particularly exposed because inventories in several regions remain below historical averages. Further refinery outages could widen diesel margins and increase transportation, agricultural and industrial costs.

OPEC+ Leaves October Production Unchanged

OPEC+ has not announced additional production to counter the latest price increase.

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman met virtually on September 6 and agreed to maintain their September production requirements during October. The group said it remained committed to market stability and would review conditions again on October 4.

The decision removes one potential source of immediate supply growth. It also suggests producers are reluctant to make another adjustment while the scale and duration of the Hormuz disruption remain uncertain.

Some OPEC+ members may have limited ability to increase exports even if their production quotas are raised. Additional oil produced in the Gulf still needs a secure route to international markets.

Saudi Arabia has increased shipments through its East-West pipeline to the Red Sea port of Yanbu. The United Arab Emirates can transport approximately 1.8 million barrels per day through the Habshan-Fujairah pipeline, which bypasses Hormuz.

These routes provide an important buffer, but they cannot fully replace the strait’s pre-conflict capacity.

Global Inventories Have Already Absorbed a Major Shock

The global oil market entered the conflict with excess supply and relatively high inventories. Those buffers helped prevent an even larger and more sustained price increase.

The IEA estimates that total oil inventories have declined by an average of approximately 3.8 million barrels per day since the conflict began. Member countries also authorized a record 400-million-barrel emergency stock release.

Alternative exports from the United States, Brazil, Kazakhstan and Venezuela helped replace some lost Middle Eastern supply. Demand also weakened as higher fuel costs encouraged consumers and businesses to reduce consumption.

However, emergency stock releases are temporary. If tanker traffic deteriorates again, governments may have fewer readily available tools to offset another prolonged disruption.

The IEA has described the earlier reduction in Hormuz flows as the largest supply disruption in the history of the global oil market.

Can Brent Crude Break Above $100?

The immediate oil price outlook depends on whether tanker attacks remain limited or expand into a broader attempt to stop commercial traffic.

A sustained move above $100 would become more likely if:

• Iran begins enforcing its proposed restricted shipping zone.
• More commercial tankers are attacked or operators suspend Gulf voyages.
• Damage forces the Jazan refinery or another major facility offline.
• Additional production is shut in because storage facilities become full.
• OPEC+ declines to provide emergency barrels while inventories continue falling.

Brent may remain between $95 and $100 if the attacks continue without causing a measurable loss of exports. The geopolitical premium could keep prices elevated, but alternative supply routes and weaker global demand may prevent an immediate breakout.

A de-escalation between Washington and Tehran could send Brent back toward $90 as traders remove part of the supply-risk premium.

Goldman Sachs reportedly estimates that oil could reach $120 if the confrontation persists. That scenario would probably require a more severe interruption to Hormuz traffic or significant damage to regional energy infrastructure.

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Higher Oil Prices Raise Inflation and Rate Risks

A break above $100 would have consequences beyond the energy market.

Higher fuel and transportation costs could slow the decline in consumer inflation, complicating upcoming decisions by the Federal Reserve, European Central Bank and other monetary authorities.

The US August Consumer Price Index is scheduled for September 11. Investors are already debating whether stronger employment and persistent inflation will lead the Fed to raise interest rates at its September meeting.

Airlines, logistics companies, chemical producers and other fuel-intensive industries could face additional margin pressure. Oil producers and energy service companies may benefit from higher crude prices, although their share performance will also depend on production volumes, taxes and operating costs.

The next US petroleum inventory report will be released on September 10 following a holiday-related delay. Changes in crude, gasoline and distillate stockpiles will show whether domestic supplies can provide another buffer against the geopolitical shock.

For now, Brent remains below $100, but the market is moving closer to that threshold as each new tanker attack increases uncertainty about the security of the world’s most important oil shipping corridor.