Oil Prices Exceed $100 a Barrel Amid Middle East Attacks

NEW YORK (AP) — The price of oil surpassed $100 a barrel for the first time since July following attacks on oil facilities and ships in the Middle East that have raised concerns about supply chain disruptions. Brent crude, the international benchmark, increased nearly 3% to $100.72 early Wednesday. U.S. benchmark crude rose 2.4% to $95.25 a barrel, contributing to a sharp increase in U.S. gasoline prices overnight. The average price for a gallon of regular gasoline rose by 7 cents to $4.22, which is more than a dollar higher than the same time last year, according to the American Automobile Association (AAA). Diesel prices also reached an all-time high on Friday and have continued to rise, with the average price for a gallon hitting $5.94 overnight, 9 cents higher than Friday. The rising costs of jet fuel have led U.S. and international airlines to reduce flights and increase fares and fees. The market reacted to reports from the U.S. military about strikes on five Iranian tankers in response to missile attacks on a Navy warship, as well as attacks by an Iranian-backed Houthi rebel group that caused fires at oil facilities in Saudi Arabia. Crude oil prices have fluctuated significantly since the onset of conflict between Israel and the United States and Iran, which has disrupted shipping through the Strait of Hormuz, a crucial waterway for global oil supply. Brent crude prices fluctuated between approximately $70 and $100 a barrel during March, April, and May, and between $72 and $102 in July, reflecting varying expectations regarding a potential agreement between the U.S. and Iran to facilitate safe oil transport. Analysts from Bank of America noted in a research report that they have raised their oil price forecast for the second half of the year to $83 a barrel due to ongoing disruptions in the Strait of Hormuz. They warned that if attacks continue to hinder shipping, prices could rise to between $95 and $120 a barrel, with potential spikes up to $150 a barrel if major energy infrastructure is damaged. Negotiations between the U.S. and Iran regarding a preliminary deal to resolve the conflict have stalled over control of the Strait of Hormuz, with Iran asserting its right to set terms and fees for ships passing through, while the U.S. insists on maintaining free passage and has implemented a Navy blockade to restrict Iranian ports and oil tankers. Increased attacks by Yemen's Houthis may further limit global oil supplies, targeting alternative shipping routes that Saudi Arabia has utilized during the conflict. Higher energy costs have impacted consumers, businesses, and economies worldwide, particularly outside the U.S., with refinery outages in Russia, reduced refining activity elsewhere, and declining inventories contributing to rising diesel and gasoline prices globally. The effects of rising prices may also influence the upcoming U.S. midterm elections, which are now just eight weeks away.