Oil Tops $100 Amid Middle East Supply Risks

Brent crude rose above $100 a barrel and was on track for its strongest weekly gain in months as escalating U.S.-Iran hostilities, tanker and energy-facility attacks, and Iran-backed Houthi strikes heightened fears of prolonged supply disruptions. The Strait of Hormuz and Bab al-Mandab have become increasingly hazardous, prompting rerouting around Africa that could add about a month to some Asia-bound journeys and raise fuel, freight, insurance and crew costs; Saudi Arabia also temporarily shut its East-West pipeline, while Gulf exports remained below prewar levels and inventories declined. Physical crude markets tightened sharply, with Oman/Dubai crude trading at a large premium to Brent and limited spare production capacity providing little cushion; diesel, other refined products and European natural-gas prices rose even more sharply. Diplomatic efforts involving Iran, Oman and Gulf states could enable temporary shipping arrangements through Hormuz, contributing to a price pullback, but analysts warned that prolonged restrictions or infrastructure damage could push oil toward $150, while a cease-fire could trigger a rapid reversal. The International Energy Agency cut its 2026 supply outlook and warned that shrinking inventories, strained refining capacity and losses in middle distillates could deepen shortages, while OPEC lowered its 2026 demand-growth forecast to 380,000 barrels per day and the U.S. Energy Information Administration raised its second-half Brent forecast to about $90 a barrel. Surging energy costs have increased transportation, household and broader inflation pressures, pushed up bond yields and weighed on equities; hotter-than-expected U.S. core inflation further complicated Federal Reserve policy expectations.