Oil Prices Surge Past $100 Amid Reports of Potential US Strikes on Iran Prior to Midterms

Oil prices jumped on Thursday following reports regarding Pentagon plans for potential US strikes on Iran that could be launched before the midterm elections, amid continued Iranian attacks on vessels in the Strait of Hormuz.

Brent, the benchmark for two thirds of the world's oil, climbed more than 2 per cent to $102.20 a barrel at 8.10am UAE time, after falling below the $100 mark earlier this week. West Texas Intermediate, the gauge that tracks US crude, rose 1.64 per cent to $87.3 a barrel.

Crude prices have been hovering above the $100 per barrel mark despite a lull in the US military campaign. US President Donald Trump, who is facing domestic backlash over the war, earlier indicated that the US would resume strikes only after the midterms. However, rising Iranian attacks in recent weeks on oil and gas tankers in the strait may force Mr Trump’s hand.

The Atlantic on Tuesday reported that the US Defence Department was identifying targets for attacks in Iran. The size of potential strikes, if the US administration was to proceed with hostilities ahead of polls, was still being discussed, it said, quoting unnamed US officials. The US may choose to conduct a limited military campaign and follow it with a larger operation after polls conclude next month, The Atlantic report added.

Traffic through the strait, the narrow waterway through which a fifth of the world's oil and gas passed before the conflict broke out, has remained thin. Strikes on tankers climbed to their highest weekly rate since the conflict began on February 28. The number of vessels transiting the strait fell to the lowest in more than two months, according to shipping data from analytics firm Kpler.

Seven commodity ships passed through the strait on Tuesday, the lowest figure since July 23, data showed. In the latest attack, a tanker north of Qatar was struck by multiple projectiles, causing casualties, the UK Maritime Trade Operations agency said on Wednesday.