Brent crude hit $100 a barrel on Wednesday as attacks on Saudi Arabia's energy infrastructure and US hits on Iranian crude carriers fuelled fears of further tightening of global oil supplies.
Brent, the international benchmark, rose 2.14 per cent to $100.02 a barrel at 11.35am UAE time, while US benchmark West Texas Intermediate gained 1.8 per cent to $94.70.
US forces destroyed five Iranian crude oil carriers on Tuesday after Iran's Islamic Revolutionary Guard Corps attacked an American warship with ballistic missiles, Central Command said.
Crude oil carriers Kaviz, Charminar, Horizon 1 and Riesco were destroyed in the Gulf of Oman, and the Derya was hit near Kharg Island, said Centcom, which released video of the attacks.
Iranian state media had earlier reported explosions on or near the island, Tehran's main crude export hub.
In a statement, Centcom said its forces had told crews to abandon ship before their vessels were struck and “rendered inoperable”.
Tuesday's US hit on crude carriers followed strikes on three Iranian tankers on Saturday after the IRGC tried to attack an American aircraft carrier and guided-missile destroyer.
“Iran continues to try to hit US naval ships, and every time they do that, or try to do that, they're going to lose tankers,” US Secretary of State Marco Rubio said on Tuesday.
Iran's retaliation
Iran retaliated with what it claimed were strikes on commercial and naval vessels and waves of missile attacks on a US military base in Jordan.
The IRGC, in a statement issued on Wednesday morning, said it had targeted two US naval vessels, eight oil tankers and 10 other ships in the Gulf that it claimed had violated a designated “unsafe” zone around the Strait of Hormuz.
Iranian oil tankers had suffered significant damage in US attacks, the IRGC said in a statement on Telegram.
Jordan’s armed forces said their air defence systems had engaged 20 ballistic missiles fired towards the country from Iranian territory.
“Eighteen missiles were successfully intercepted and destroyed,” a spokesman said.
Bracing for disruption
Traders are bracing for more disruption to crude flows through the Strait of Hormuz after Iran threatened to attack more commercial vessels.
The Iranian navy has told crews aboard oil tankers in or near Bahrain and Kuwait to leave their vessels, saying the ships will be targeted.
“We warn all tanker crews in the vicinity of the ports and harbours of Kuwait and Bahrain, which host these terrorists and are complicit in their hostile actions, to immediately leave their vessels, whether they are at anchor or berthed at port, as they will be targeted,” the IRGC said in a statement on Telegram.
The attacks on crude carriers this week have broken the lull in tit-for-tat strikes between the US and Iran. The two sides had exercised restraint after the US said it would increase economic pressure through sanctions on Iran instead of broadening its military campaign.
Brent oil is up more than 60 per cent so far this year, and Goldman Sachs has raised its price forecasts, saying risks remain “significantly tilted to the upside”.
“Markets are increasingly pricing a prolonged Mideast conflict,” Goldman Sachs Group analysts said in a note.
Saudi attacks
Iran-backed Houthi militants attacked Saudi Arabia’s energy infrastructure on Tuesday, including its 400,000 barrel-a-day Jazan refinery and other facilities serving the country's domestic market.
The Saudi-led coalition in Yemen said Houthi attacks on Abha, Khamis Mushait, Jazan and Najran wounded 73 people and struck Aramco's Jazan facilities. It called the assaults a “dangerous escalation”.
The Yemeni militia group has blockaded Saudi Arabia’s ports and restricted the flow of crude oil transiting through Bab Al Mandeb strait.
It has hit several Saudi crude carriers in recent weeks and has launched attacks on Saudi territory in response to what its claims is Riyadh’s siege of the Yemeni capital, Sanaa.
The Houthi campaign against the kingdom, Opec's biggest oil exporter, complicates the global energy supply dynamics and adds to Iran war concerns.
