Crude oil prices climbed above the $95 a barrel threshold on Wednesday, marking the highest level in six weeks amid deteriorating conditions in the Middle East. The surge was driven by renewed military tensions between the United States and Iran near the Strait of Hormuz, combined with Houthi threats targeting vessels transporting Saudi crude through the Bab el-Mandeb passage. Brent crude reached $95.24 before settling at $94.40, representing more than a 3% daily increase.
The price movement reflects a sharp reversal from earlier in July, when crude had declined to $71 per barrel. The current escalation follows an 11th night of military strikes on Iranian targets, including aircraft facilities and drone storage sites. The conflict has already cost the United States approximately $37.5 billion, according to statements from the Trump administration, which indicated strikes would continue to intensify despite ongoing diplomatic efforts.
Energy analysts project that crude could reach $120 per barrel by year’s end unless exports through the Hormuz Strait resume normal operations. The International Energy Agency noted that current market stability has relied on emergency measures, including the release of approximately 400 million barrels from member reserves and alternative export routes established by Saudi Arabia and the United Arab Emirates. Additional support has come from increased production in Europe and the Americas, as well as reduced demand from major importers like China.
However, broader supply challenges persist. Refinery operations have declined significantly, creating tightness in markets for refined products including diesel and gasoline, despite increased crude deliveries. The IEA warned that without a full resolution enabling unrestricted passage through the Hormuz Strait, global energy security faces further deterioration, particularly as European nations attempt to rebuild depleted gas storage ahead of winter.
Norway’s state oil company Equinor reported that profits nearly doubled to $11.5 billion during the second quarter, reflecting gains from elevated energy prices. Meanwhile, both conflict parties have targeted civilian infrastructure, including power facilities and desalination plants, actions that the UN Secretary General characterized as unacceptable under international law.
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