Oil prices rose above $100 (€85.92) a barrel for the first time since July on Wednesday as an escalation of hostilities in the Middle East raised fears over global supplies.
Brent crude, the international oil benchmark, rose as much as 3.1 per cent to $100.95 a barrel, topping $100 for the first time since July 24.
The rise comes as the US and Iran battle for control of the Strait of Hormuz, through which about a fifth of the world’s oil and gas passed before the war, with the warring parties locked in a cycle of tit-for-tat strikes.
Global markets weakened, with the Stoxx Europe 600 index down 1.2 per cent on Wednesday morning. The 10-year German bond yield rose 0.04 percentage points to 3.4 per cent, a post-2011 high, as the price of the debt fell.
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The US military said on Tuesday night that it had “destroyed” five Iranian oil tankers. It said it launched the strikes after the Islamic Revolutionary Guard Corps (IRGC) targeted an American warship with ballistic missiles twice this week.
Iran said on Wednesday that it responded to the latest US strikes by targeting two American vessels and eight oil tankers, “inflicting heavy damage”. The IRGC said 10 ships that “attempted to cross the prohibited and unsafe area of the Strait of Hormuz” were also targeted.
The IRGC said it launched ballistic missile strikes on the US Al-Azraq air base in Jordan, saying it hit maintenance and repair hangars, preparation facilities and shelters for fighter jets.
Jorge León, head of geopolitical analysis at Rystad Energy, said traffic through the strait had “come down massively” during the recent escalation of hostilities, from about 8mn barrels a day during the last week of August to about 1mn b/d this week.
Oil markets were in a worse position to weather supply disruptions than earlier in the conflict because of eroded inventories and an increase in Chinese purchases of crude, he said.
Has the Government’s strategy to keep fuel costs down proved to be ‘knee-jerk’ and difficult to reverse?
“We’re at $100 again but this time around it’s more serious because the buffers are getting thinner and thinner,” said León. “Crude stocks are getting lower and product stocks — particularly diesel — are a big problem.”
Iran-backed Houthi rebels in Yemen fired dozens of missiles and drones at energy facilities in Saudi Arabia on Tuesday.
The Saudi energy ministry said the attacks led to a “temporary halt in some operations”, adding that specialised teams were working to contain fires at several locations and assess the damage. The ministry has not identified which sites were hit or the scale of the damage.
The attacks marked a significant escalation as the Houthi militant group has reignited a more than decade-long war with Saudi Arabia.
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The civil war in Yemen had been relatively calm since the warring parties agreed a ceasefire in 2022, but hostilities resumed in July after the Houthis declared they were imposing a blockade on Saudi ports and attacked tankers in the Red Sea.
The Houthis — whom Riyadh believes are being encouraged by Tehran — have threatened to close the Bab al-Mandeb Strait, which has become a vital route for Saudi oil exports since Iran closed the Strait of Hormuz, adding to concerns about global oil supplies.
Saudi Arabia intervened in Yemen’s war in 2015 to lead a coalition to fight the Houthis after they seized Sana’a, the Yemeni capital, and ousted the internationally recognised government.
The escalation in the Middle East comes as traders and analysts warn of a renewed supply crunch in oil markets as countries draw down strategic reserves.
The oil price hit a wartime high of $126 a barrel in late April before falling back to $70 after the warring parties agreed to a memorandum of understanding on a potential peace deal.
That interim agreement was supposed to extend an April ceasefire by 60 days, lead to the gradual reopening of the Strait of Hormuz and lay the framework for a final settlement to the six-month conflict. But it swiftly collapsed, and crude prices have risen steadily over the past six weeks as the US and Iran engage in tit-for-tat strikes.
US President Donald Trump last month announced what he described as a new campaign of “economic warfare” against Iran, as his administration seeks to use a naval blockade on Iranian ports and the threat of sanctions against Tehran’s trading partners to intensify the economic pressure on the Islamic republic.
Iranian officials have said they would return to the June MoU, but only if the US lifts its blockade, reinstates a waiver to allow it to sell oil and gives it access to frozen funds held overseas, people briefed on the matter said.
But the Trump administration has told mediators that the MoU — which expired last month — is null and void and that the US would not return to it, the people said.
Analysts say the two sides now appear locked in another escalatory cycle, with Tehran vowing to resist the US’s economic pressure.
Mohsen Rezaei, Iran’s top security official, said on Tuesday that Washington had “received a clear warning from Iran’s new missiles”.
“Economic warfare will be met by a maritime exclusion zone across the Persian Gulf to the blockade perimeter,” he said on X. “The operational posture toward U.S. warships and bases has been fundamentally recalibrated.”
There are no longer talks between the US and Iran. But mediators have kept back channels between the warring parties open and are trying to create a framework for negotiations on a potential new deal, diplomats say. - Copyright The Financial Times Limited 2026
