Oil prices top $110 as Persian Gulf tanker attacks choke crude shipments

Brent crude climbed past $110 a barrel on Wednesday as escalating military strikes against commercial shipping and energy facilities in the Middle East raised fears of a prolonged supply disruption across international markets.

Brent crude futures rose by $1.34, or 1.23 per cent, to reach $110.10 a barrel, after touching a five-month peak of $111.99 earlier in the week. US West Texas Intermediate crude advanced $1.18, or 1.21 per cent, to $99.00 a barrel.

What happened to shipping routes

The price surge follows a sharp escalation in attacks on commercial vessels near the Strait of Hormuz, the world's most critical oil transit chokepoint. A supertanker caught fire after striking a naval mine south of the strait, with Iran's Revolutionary Guards Navy stating through domestic media that the vessel had been "violating" maritime regulations.

Ship-tracking agency Kpler recorded at least 18 attacks on vessels over the past fortnight. The violence has steadily widened beyond the waterway itself into the Gulf of Oman, hitting ship-to-ship transfer operations that regional producers rely on to sustain exports during crises.

Data compiled by Kpler shows daily crude flows departing the Persian Gulf dropped from more than 20 million barrels two weeks ago to an average of 8.5 million barrels, reflecting widespread diversions and pauses by commercial operators.

Attacks strike Saudi infrastructure

Regional supply risks intensified further after Houthi forces claimed responsibility for direct attacks against Saudi Arabian energy and transport infrastructure. The targets included a Saudi Aramco facility in Yanbu on the Red Sea coast, the remote Shaybah oilfield near the border with the United Arab Emirates, and regional airports in Riyadh and Abha.

On the ground in Yemen, fighting has flared severely. The death toll from a Houthi assault on Yemeni government forces reached 73 on Monday.

Diplomatic overtures have yielded little relief. Iranian President Masoud Pezeshkian met Pakistan's army chief in Tehran to review mediation channels, which temporarily eased crude prices earlier in the week. However, Iranian Foreign Minister Abbas Araqchi confirmed in a television interview that neither Saudi Arabia nor the Houthis had responded to Tehran's proposal to broker peace discussions.

Refiners face tightening balances

Consumer nations are scrambling to contain the downstream pressure. In the United States, two Energy Department officials confirmed talks with refiners worldwide to raise processing rates, as a worsening shortage of diesel fuel drives wholesale prices upward.

American crude inventories were expected to have fallen by approximately 800,000 barrels during the week ended 16 October, alongside contractions in refined fuel stockpiles, according to an analyst survey. With regional risk premiums firmly embedded and Persian Gulf tanker traffic severely constrained, market analysts at ING noted that crude benchmarks will stay elevated until safe passage through the Gulf can be restored.