Global oil prices have risen above $100 per barrel for the first time since July, as growing tensions between the United States and Iran increase fears of further disruptions to global oil supplies.
Brent crude, the international benchmark, settled at about $101.21 per barrel on Wednesday, gaining 3.4%. U.S. West Texas Intermediate crude also increased, settling at around $96.05 per barrel.
The latest increase comes as fighting between the U.S. and Iran continues to affect the movement of oil through the Strait of Hormuz, one of the world’s most important energy routes. Before the current conflict, around one-fifth of global oil and gas supplies passed through the waterway.
Concerns became stronger after attacks involving Iranian forces and U.S. military operations against Iranian tankers. Iran-backed Houthi forces have also attacked Saudi energy infrastructure, adding to concerns about oil production and transportation in the region.
Analysts say the oil market has become more vulnerable because several months of disruption have already reduced available supplies. Reuters reported that around 10 million barrels of oil per day, representing roughly 10% of global oil demand, remain affected by the conflict.
The rise in oil prices could have wider effects on businesses and consumers. Higher crude prices normally increase the cost of producing petrol, diesel, aviation fuel and other energy products. This can also raise transportation and manufacturing costs and eventually push up the prices of food and other goods.
The development is also creating fresh concerns about inflation. Higher energy costs could make it more difficult for central banks to reduce interest rates, particularly if elevated oil prices continue for a long period.
Financial markets have already reacted to the development. U.S. stocks fell on Wednesday, with the S&P 500 declining 0.5%, the Dow Jones Industrial Average dropping 0.8% and the Nasdaq falling 0.6%. Energy companies, however, benefited from the higher oil prices.
The situation remains uncertain, with investors closely watching developments in the Middle East and the flow of oil through key shipping routes.
If the conflict continues and oil supplies remain restricted, analysts warn that prices could remain high and place additional pressure on businesses, governments and households around the world.
