Oil tops $107 as Iran missile revival rattles markets

Crude oil prices surged on Thursday, with Brent crude topping $107 per barrel and U.S. crude breaking above $100 for the first time since May, as a cascade of geopolitical threats across the Middle East rattled energy markets already strained by more than six months of war between the United States and Iran.

The rally, which saw both benchmarks climb more than 5%, was the sharpest single-day advance since August and came as traders digested a Wall Street Journal News Corp ↘ 1.37% report that Iran has resumed producing ballistic missiles in underground facilities using stockpiled components. The revelation undercuts what Washington and Israel had portrayed as one of the war's chief accomplishments — the degradation of Tehran's missile capabilities.nbcnews+2

Widening Regional Threats

The oil market's risk calculus expanded on multiple fronts this week. Iran-backed Houthi forces seized Yemen's port city of Mocha on the Red Sea coast, bringing them closer to the Bab el-Mandeb strait, one of the world's most critical shipping chokepoints. Attacks on oil tankers have also increased, and continued threats surrounding the Strait of Hormuz — through which roughly a fifth of the world's oil passes — have kept supply fears elevated.reuters+2

Adding another layer of disruption, a Ukrainian drone strike on September 6 knocked out Russia's Ryazan oil refinery, one of the country's largest, halting operations at a facility with a capacity of about 17 million metric tons of crude per year.glavnoe+1

Markets Brace for Prolonged Shock

The U.S. Energy Information Administration on Wednesday raised its oil price forecasts, now expecting Brent crude to average about $91 per barrel this year, a nearly 5% increase from its prior estimate. The agency said Middle East output shut-ins would average about 5.7 million barrels per day during the fourth quarter and that exports from the region are not expected to return to pre-conflict levels until the second quarter of next year.reuters

According to the New York Times, Thursday's price action pushed oil to levels not seen since the acute phase of the conflict earlier this year. NBC News reported that U.S. crude hit $100 per barrel for the first time since mid-May.nytimes+1

With no permanent ceasefire in place and Iran's missile program showing resilience, analysts see little relief ahead. A U.S. source told the Wall Street Journal that Iran likely resumed small-scale missile production after reaching a memorandum of understanding with the U.S. in mid-June, with intelligence reports pointing to activity at several underground facilities, including one just east of Tehran.swedenherald+1