Oil futures break above $100 as US-Iran attacks escalate. What to watch next?

The useful part

Brent crude futures broke above the $100 per barrel mark today for the first time since late July as the latest escalation between the US and Iran intensified concerns over prolonged and heavier disruptions to oil supplies. Brent rose more than 2% to around $100 per barrel, while WTI also pushed higher toward $95. The move comes after US forces struck five Iranian oil tankers and Iran retaliated with attacks targeting US military assets and vessels in and around the Strait of Hormuz.

How it works

• The latest developments are raising concerns that the conflict could become even more disruptive.
• Strait of Hormuz remains the key risk The biggest concern for oil traders is the Strait of Hormuz, through which a substantial share of global oil and refined-product shipments normally passes.
• Oil flows through the strait have already been severely reduced since the conflict began, with recent volumes falling well below the levels seen before the latest escalation.
• The possibility of further attacks on tankers or energy infrastructure is therefore adding a significant geopolitical risk premium to crude prices.
• Several Saudi facilities have been affected, increasing concerns that disruptions could spread beyond just the US-Iran conflict.

What to take from it

Why the $100 level is important The significance of the $100 level is also psychological. A sustained move above it would reinforce expectations that the market is pricing a prolonged period of supply disruption rather than a temporary geopolitical shock.

Details worth keeping

At the same time, it could increase further inflationary...