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Oil tops $100 as markets price in prolonged Middle East conflict - YAHOO FINANCE
Oil (BZ=F, CL=F)
The price of oil surged past $100 a barrel on Thursday as attacks in the Persian Gulf raised fears of disruption to energy supplies and investors began to price in a longer conflict in the region.
Brent crude (BZ=F) futures rose 3.9% to $92.85 a barrel , having hitting $101.59 a barrel during the Asia session, while West Texas Intermediate (CL=F) climbed 2.2% to $85.31 at the time of writing.
The gains came as hopes that turmoil in energy markets might ease faded after Iranian boats appeared to attack two fuel tankers in Iraqi waters. The incident suggested the confrontation between Iran and US-Israeli forces was far from resolved.
The attacks followed warnings from senior Iranian officials of a long “war of attrition” that could threaten the global economy. There were also reports that Oman’s key oil (BZ=F, CL=F) export terminal had been evacuated.
Jim Reid, market strategist at Deutsche Bank (DBK.DE), said investors were increasingly concerned about the potential for a broader economic shock.
“From a market perspective, the problem is that investors are increasingly pricing in a more protracted conflict that causes extensive economic damage. After all, with no concrete signs of de-escalation yet, that’s keeping oil prices elevated, and raising the risk of a broader stagflationary shock. Indeed, we know that investors are pricing in the longer scenarios, because the 6-month brent future is also up +3.06% this morning to $82.97/bbl, and with each passing day it gets harder to argue that the disruption to shipping and energy infrastructure will only prove temporary.”
Analysts at Goldman Sachs (GS) have raised their forecast for Brent crude (BZ=F), the international benchmark, in the fourth quarter of 2026 to $71 a barrel from $66. US crude is now expected to average $67 in the final quarter, up from a previous estimate of $62.
Brent is forecast to average $98 a barrel in March and April. However, the bank said prices could climb as high as $110 in an upside risk scenario in which flows through the strait are disrupted for a month.
