Oil prices rise further on Middle East tensions, Brent tops USD 115

Oil prices began the week with further gains. This was partly driven by news that Yemen’s Houthi rebels, allies of Iran, had fired a missile at Israel for the first time since the start of the current war in the Middle East. At around 08:15 CET, North Sea Brent crude was up more than two percent, trading slightly above USD 115 a barrel. US West Texas Intermediate (WTI) crude was up more than one percent, rising above USD 100 a barrel.

The conflict in the Middle East, triggered in late February by US-Israeli strikes on Iran, has led to a sharp rise in energy prices on global markets. It has crippled shipping through the key Strait of Hormuz, which normally carries about a fifth of the world’s oil and gas supplies. Brent crude has gained almost 60 percent since the beginning of February and is heading for a record monthly increase, Reuters reported.

US President Donald Trump says indirect talks between the US and Iran, mediated by Pakistani envoys, are progressing well and that a ceasefire deal could be reached quickly. Analysts, however, say the oil market is sceptical about the prospect of an imminent deal.

“Despite Trump’s claims of ongoing direct and indirect talks with Iran, the market has practically stopped factoring in the possibility of a deal to end the war and is preparing for a sharp escalation in military action,” said Vandana Hari, an analyst at Vanda Insights.

The Houthi rebels’ missile strike on Israel over the weekend has also raised concerns about shipping in the Red Sea. “The conflict is no longer confined to the Persian Gulf and the area around the Strait of Hormuz; it is also spreading to the Red Sea and the Bab al-Mandab Strait, one of the world’s most important chokepoints for transporting oil and oil products,” analysts at JP Morgan said.

Oil prices in dollars per barrel (about 159 litres)