Oil futures gained more than 1% on Wednesday as US-Iran military escalation, Strait of Hormuz disruptions, and a sharp drop in OPEC production fueled severe supply anxiety.
Brent crude futures gained 1.3% to $99.25 per barrel, while Dubai 1st Line (Platts) energy futures surged 1.5% to $90.11/bbl.
"Oil remains close to $100, and notably Shanghai oil is now trading higher than Brent having been vastly lower in the early stages of the Iran War," noted Michael Every, global strategist at Rabobank.
The upward price action follows US strikes on five Iranian tankers and a vessel near the Kharg Island export hub, prompting retaliatory Iranian missile launches toward Jordan, warnings to shipping near Kuwait and Bahrain, and Houthi strikes on Saudi energy infrastructure.
Compounding these supply shocks, OPEC crude production reportedly fell by 900,000 barrels per day last month to 19.9 million barrels per day, driven primarily by a 1.1 million barrels per day slump in Saudi output as security threats forced cuts across primary and backup export routes.
Meanwhile, "Crack spreads remain worryingly high all over. Refined product stocks remain worryingly low," Every added. Diesel traded near $200 per barrel, Saxo Bank analysts noted.
Oman crude front-month swaps climbed to their highest since early April, driven by Houthi attacks on Saudi Arabia, persistent Hormuz tensions, and strong Chinese buying, Reuters columnist Ron Bousso noted in a social media post.