West Texas Intermediate surged past $100 a barrel for the first time since May, climbing more than 7 percent to $103.86 as overlapping supply threats in the Red Sea and the Strait of Hormuz collided with a pickup in Chinese buying. The benchmark had traded as low as $95.37 earlier in the session.
Supply threats converge
Yemen’s Houthi movement, which is linked to Iran, said it is close to controlling the Bab al-Mandab Strait, choking Red Sea traffic and putting pressure on Saudi Arabia. At the same time, shipments through Hormuz remain constrained. U.S. officials told the Wall Street Journal that Iran has accelerated ballistic missile production and struck ten vessels near the strait on Wednesday, a response to American strikes on five Iranian tankers. President Trump added that the United States may target Pickaxe Mountain, near the heavily damaged Natanz enrichment site, and signaled the conflict could extend beyond November’s midterm elections.
China returns as top buyer
ING noted that China has ramped up crude purchases in recent weeks after domestic stockpiles were drawn down, reclaiming its position as the world’s largest importer. The bank said sustained Chinese demand would magnify the effect of any supply disruption, keeping prices elevated.
Inventories tighten
U.S. commercial crude stocks fell by 391,000 barrels to 424.1 million barrels last week, the Energy Information Administration reported, while refining runs remained robust. The draw, though modest, reinforced the tighter balance implied by the geopolitical backdrop.
What to watch
The next test is whether the Houthis translate their claim of control at Bab al-Mandab into sustained interdiction, and whether Iran’s missile buildup leads to further tanker attacks. On the demand side, the pace of Chinese restocking will determine if the current premium holds or fades once the immediate fear subsides.