WTI crude climbs 5.5% as Mideast strikes threaten Gulf supply

A third straight session of buying has carried WTI crude up more than 5.5% as US strikes on Iranian tankers and a Houthi attack on Saudi Aramco's Jizan refinery deepened fears that the widening Middle East conflict will choke Gulf supply routes. The benchmark traded in the $94-95 range Tuesday, while Brent crude climbed 1.44% to $99.33 a barrel, within reach of the $100 mark for the first time in months.

"Oil remains the principal macro driver. With no clear signs of de-escalation, the geopolitical risk premium embedded in crude prices is expected to remain elevated, keeping volatility across global financial markets high," Ponmudi R, chief executive of trading and wealth-tech firm Enrich Money, said.

The escalation has spread across multiple fronts. Iran announced an exclusion zone near the Strait of Hormuz, the chokepoint for roughly a fifth of global oil consumption, raising risks for vessels navigating the waterway in coming weeks. That followed reports of fresh US attacks on Iranian tankers. On Monday, Yemen's Iran-aligned Houthi movement struck Aramco's Jizan facility in southwestern Saudi Arabia for a second time in a month; the refinery processes about 400,000 barrels a day, and the extent of damage was still being assessed as of Tuesday, according to people familiar with the incident cited by the Financial Times.

The supply threat is now visible in market gauges beyond the spot price. The Cboe OVX index, which measures expected 30-day volatility in crude, advanced toward the 50-point area, its highest reading in months. Futures activity has surged in tandem: more than 1.3 million contracts changed hands on Sept. 8, a single-session volume high not seen in several months, with much of the buying tied to hedging strategies aimed at securing barrels now before supply conditions tighten further.

For energy-importing economies the stakes are immediate. India's benchmark Sensex fell 500.25 points to 75,060.61 and the Nifty dropped 129.40 points to 23,506.10 in early trading Wednesday, with IT stocks leading losses as Brent hovered near $100. "For India, sustained crude prices around or above $100 could intensify inflationary pressures, weigh on the rupee and the current account, squeeze corporate margins and diminish expectations of monetary easing," said Radhakrishnan, founder and chief executive of research firm HST Wealth.

The last comparable run-up came when a prior round of Gulf hostilities in 2024 briefly pushed Brent above $90 before diplomatic efforts capped the move; this time no meaningful negotiation track has emerged, and Aramco chief executive Amin Nasser said last month that attacks had already caused temporary production interruptions at company facilities. If the conflict keeps widening, WTI faces its next test at the $99 resistance zone, where the 61.8% Fibonacci retracement of the most recent swing converges with prior highs. A break above that level could open room for a more aggressive bullish trendline on the daily chart, while a retreat toward the $86 area would mark the first sign that the risk premium is unwinding.

This article is for informational purposes only and does not constitute investment advice.