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- Brent Oil prices have appreciated 5% so far this week, reaching highs above $97.00.
- Escalating tensions between the US and Iran are boosting crude prices higher this week.
- Deutsche Bank analysts warn that Brent prices might reach $150 on a prolonged closure of the Strait of Hormuz.
Crude prices rise for their third day in a row on Wednesday, as fresh hostilities between the US and Iran cast further doubt about a fragile ceasefire. Brent crude, the global benchmark for Oil prices, is trading at $97.25 at the time of writing, about 5% up on the week and a few cents below one-week highs of $97.77.
The US military announced “self-defence” strikes on Iranian Qeshm island on Wednesday, following reports of Iranian attacks in Gulf countries. Kuwait has reported significant material damage at its international airport and several wounded people after a drone attack.
These hostilities follow Tehran’s announcement of the suspension of talks with the US and its vow of retaliation for what it considered violations of the ceasefire agreement.
US President Donald Trump reiterated in a Truth Social post on Tuesday that negotiations with Tehran are ongoing and that reports to the contrary are simply fake news. Markets, however, are growing increasingly sceptical about a negotiated end of the war and a swift reopening of the key Strait of Hormuz, which is driving Oil prices towards the key $100 level.
Deutsche Bank analyst Jim Reid and colleagues warn that the Brent crude barrel could reach $150 if Hormuz remains closed for a long time: “If the Strait of Hormuz experiences a prolonged closure, that would push Brent towards $150/bbl, hitting global growth and pushing Europe into recession.”
