Brent crude approached $100 a barrel after the United States struck Iranian tankers near the vital crude export hub of Kharg Island, raising fears of deeper disruptions through the Strait of Hormuz.
Less than a dollar separates the global benchmark index from a triple-digit level, after renewed fighting across the Middle East, while West Texas Intermediate crude traded near $94.
The US Central Command said the US military destroyed five Iranian oil tankers in response to attempts to target a US Navy warship with ballistic missiles.
Tehran responded by targeting Jordan with ballistic missiles and issuing warnings to ships in the Arabian Gulf. According to Iranian state television, the Iranian Revolutionary Guard threatened tanker crews in the region, ordering them to leave because they would be targeted.
The US strikes come after renewed attacks by Iranian-backed Houthi militants on energy facilities in southern Saudi Arabia, forcing several sites to temporarily halt operations. Hostilities have escalated across the Middle East over the past week, ending a period of relative calm and driving up oil prices.
Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets, said the path of least resistance is a strong and steady rise as the war enters its seventh month.
He added: The underlying picture for products remains bullish as global inventories and reserves decline. As is typical, the US and Iran continue their counterattacks and warnings.
Brent crude nears $100 for the first time since July
Brent crude has risen more than 60% this year, nearing $100 a barrel for the first time since late July, and European natural gas prices climbed for the fourth consecutive session following the US strikes. Refined products such as diesel have risen even more sharply, as the Middle East conflict expands into the Red Sea, alongside the Russian-Ukrainian war.
The Iranian tankers destroyed by Washington belonged to the Iranian Revolutionary Guard, according to a US official. The strikes represent an escalation in the US campaign against Tehran, which already includes a naval blockade that has significantly reduced the country's oil exports.
Foreign Minister Marco Rubio told reporters during a visit to Colombia: When they try to attack U.S. Navy ships, they themselves will be attacked. Every time they do that, or try to do it, they will lose tankers.
Previous US strikes on Kharg Island have focused on military assets, but President Donald Trump has threatened to target oil facilities and has at times floated the idea of seizing the export hub. US Central Command said in a post on the XN platform that five Iranian tankers were destroyed in the latest strikes.
Before the Iran-Iraq War, roughly one-fifth of the world's oil and liquefied natural gas passed through the Strait of Hormuz to global customers. Some crude oil is still exported through the narrow waterway, often on tankers with their transponders switched off, but the ships face a constant threat of attack.
Separately, renewed Chinese buying has helped tighten the global oil market and boost prices for some crude grades. This buying spree represents a reversal from recent months, when refineries relied on ample stockpiles to limit imports and protect themselves from sharp price increases.
Latest price movements
Brent crude for November settlement jumped 1.5% to $99.37 a barrel at 9:52 a.m. in Singapore.
West Texas Intermediate crude for October delivery advanced 1.5% to $94.40 a barrel.
Monday's trading was combined with Tuesday's trading due to the US holiday.
