Brent settles at $101.21 as tanker strikes and Houthi raids tighten supply

Brent crude settled at $101.21 a barrel on Wednesday, up 3.36 percent. It was the contract's first close above $100 since July and the highest finish since 22 May. West Texas Intermediate rose 3.25 percent to $96.05, also a high close since May. Prices had already jumped on Tuesday after Houthi strikes on Saudi cities and oil sites. They jumped again after U.S. forces named five Iranian tankers destroyed in the Gulf of Oman and near Kharg Island.

The six-month war has turned the Strait of Hormuz from a routine sea lane into a rationed one. Before fighting resumed on 30 August, Rystad Energy chief economist Claudio Galimberti put Hormuz crude flows at eight to nine million barrels a day, double the prior week's volume. During a brief U.S.-Iran pause in July, the strait had touched pre-war levels near 16 million barrels a day. Kpler's Tuesday count was six commodity vessels, five inbound and one outbound, against a ten-day average of twelve.

Russell Hardy, chief executive of Vitol, told the APPEC conference in Singapore that about nine million barrels a day of crude and one million barrels of products were still leaving the Middle East in recent days. That is a large number and a smaller one than the market used to treat as normal. Gulf exporters have been sending cargoes for ship-to-ship transfers outside Hormuz and pushing oil through Red Sea and Mediterranean outlets.

Those detours are under strain too. Saudi loadings from Ras Tanura inside the Gulf resumed in August. Exports from Yanbu on the Red Sea fell to a six-month low of about 1.429 million barrels a day in August, against an average of 3.9 million barrels a day in the previous three months, according to provisional Kpler figures. Houthi attacks this week on Abha, Khamis Mushait, Jazan and Najran, including energy sites, add risk to that Red Sea route. Saudi shipments through Egypt's Sidi Kerir terminal reached about 2.139 million barrels a day in August, more than twice June's volume.

Brent was near $70 before the war began on 28 February. It neared $115 in early May, then eased through the summer as a pause took hold. A quarter-gain since early August has brought the benchmark back to the round number that consumers and finance ministries watch. Gasoline, diesel and jet fuel have followed the crude print higher, as they did in earlier spikes this year.

The immediate supply scare is not a total Gulf shutdown. It is a thinner, slower, more expensive set of routes. One outbound commodity ship through Hormuz on a Tuesday is a statistic traders can price. A Houthi hit on a Saudi terminal would be another. A further U.S. strike near Kharg would be a third. OCBC analysts wrote that Iranian attacks on Saudi energy facilities and the destruction of five tankers raised the chance of another prolonged disruption.

Why the price is not higher than $101 is the other half of the tape. Alternative routes exist. Some volume still moves. Inventories have not been emptied in a single week. Hardy's nine-plus-one million barrels a day is the floor the market is leaning on. If that floor drops toward the mid-single millions and stays there, $101 will look like a way station.

For importers in Asia and Europe the bill is already due. Jet fuel and diesel crack spreads widen when crude jumps and when product ships avoid the Red Sea. For producers that can still load at Ras Tanura or Sidi Kerir, the same price is a windfall with a security cost attached. For Iran, each lost tanker is both a military loss and a smaller export fleet.

Thursday's session will show whether $100 holds as a settlement level or only as a spike print. The facts that put it there are not technical. They are named ships, named ports and a strait that on Tuesday sent one commodity hull the other way.