Brent crude has climbed past $107 a barrel, marking its highest level in nearly four months, as deteriorating conditions in the Middle East intensify worries over global supply.
The international benchmark jumped more than 6% at Thursday's close, briefly topping $108 a barrel during the session before giving back some of those gains. Meanwhile, West Texas Intermediate futures settled above the $102 mark for the first time since May.
A rising number of attacks on shipping near the Strait of Hormuz has unnerved traders, with the vital waterway emerging as a central flashpoint in the conflict. At the same time, both Washington and Tehran are bracing for a protracted confrontation, and sharp advances in natural gas and diesel prices have reignited concerns that climbing energy costs could stoke inflation.
Iran has signaled no intention to back down in the face of the US naval blockade, threatening to intensify its strikes if American forces continue attacking its territory. In a related development, the Tehran-backed Houthi rebels in Yemen are now targeting Saudi Arabian assets. Riyadh has cautioned that its crude output last month plunged to its lowest level since 1990.
"Oil prices have surged to their highest point since May as the market recalibrates how much geopolitical risk has escalated, with growing attention on how long this threat might persist," noted Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
On the technical side, Kpler data showed Thursday that trend-following commodity trading advisors had reached the 100% long limit in Brent crude, suggesting limited room for additional buying on the day. The firm also noted that algorithmic traders were 91% long on WTI.
Brent has advanced more than 75% this year, though it remains well below the $126 peak touched in April during the earlier phase of the war, partly because some crude continues to flow out of the Persian Gulf. Brent futures for November delivery settled 6.3% higher at $107.63 a barrel, while WTI futures for October gained 6.7% to close at $102.48.