Brent Crude Reaches $100 as US Strikes on Iranian Tankers and Houthi Attacks Raise Global Supply Concerns

Brent crude hit the $100 a barrel mark as fresh attacks on Saudi Arabia's energy infrastructure and US hits on Iranian crude carriers stocked fears of further tightening of global oil supplies. Brent, the international benchmark, rose 2.14 per cent to $100.02 a barrel at 11.35am UAE time, while US benchmark West Texas Intermediate gained 1.80 per cent to $94.70.

US forces destroyed five Iranian crude oil carriers on Thursday after Iran's Islamic Revolutionary Guard Corps attacked a US warship with ballistic missiles, Central Command said. Crude oil carriers Kaviz, Charminar, Horizon 1 and Riesco were destroyed in the Gulf of Oman, and the Derya was hit near Kharg Island, Centcom, which released video of attacks said. The Iranian state media had earlier reported explosions on or near the island, Tehran's main crude export hub.

In a statement, Centcom said its forces had told crews to abandon ship before their vessels were struck and "rendered inoperable". The latest US hit on crude carriers follows sinking of three Iranian tankers on Saturday after the IRGC tried to attack a US aircraft carrier and guided-missile destroyer.

"Iran continues to try to hit US naval ships, and every time they do that, or try to do that, they're going to lose tankers," US Secretary of State Marco Rubio said on Thursday.

Tehran's retaliation

Tehran retaliated with what it claimed strikes on commercial and naval vessels and waves of missile attacks on US military base in Jordan. Iran’s IRGC said it has targeted two US naval vessels, eight oil tankers and 10 other ships in the Gulf, accusing them of violating a designated “unsafe” zone around the Strait of Hormuz.

The strikes were retaliation for attacks on Iranian oil tankers, which suffered significant damage, the IRGC said in a statement on Telegram. It however, did not identifying the vessels or provided evidence of the attacks.

Jordan’s armed forces separately said their air defence systems engaged 20 ballistic missiles fired towards the country from the Iranian territory. “Eighteen missiles were successfully intercepted and destroyed,” an armed forces spokesman said.

Bracing for disruption

Traders are bracing for more disruption to crude flows through the Strait of Hormuz as Iran has threatened to attack more commercial vessels. Iranian Navy has warned crews aboard oil tankers in ports and harbours in Bahrain and Kuwait to leave their vessels immediately, saying the ships would be targeted.

“We warn all tanker crews in the vicinity of the ports and harbours of Kuwait and Bahrain, which host these terrorists and are complicit in their hostile actions, to immediately leave their vessels, whether they are at anchor or berthed at port, as they will be targeted,” the IRGC said in a statement on Telegram.

The attacks on crude carriers this week have broken the lull in tit-for-tat strikes between the US and Iran. The two sides had exercised restraint after the US said it will build economic pressure through sanctions on Tehran instead of broadening its military campaign in the region. Brent oil is up more than 60 per cent so far this year, and Goldman Sachs has raised its oil price forecasts, saying risks remain "significantly tilted to the upside".

“Markets are increasingly pricing a prolonged Mideast conflict,” Goldman Sachs Group analysts said in a note.

Saudi complication

Iran-backed Houthi militants has claimed to have launched fresh attack on Saudi Arabia’s energy infrastructure including its 400,000 barrel-a-day Jazan refinery and other facilities serving the kingdom's domestic market. The Yemini militia group has blockaded Saudi Arabia’s ports and has restricted the flow of crude oil transiting through Bab El Mandeb strait.

It has hit several Saudi crude carriers in recent weeks and has launched attacks on Saudi territory in response to what its claims is Riydah’s siege of the Yemeni capital, Sana’a. Earlier this week, Saudi-led coalition in Yemen said Houthi attacks on Abha, Khamis Mushait, Jazan and Najran wounded 73 people and struck Aramco's Jazan facilities. It called the assaults a "dangerous escalation".

The Houthi campaign against the kingdom, Opec's biggest oil exporter, complicates the global energy supply dynamics and adds to Iran war concerns.