ING analysts Warren Patterson and Ewa Manthey say Oil prices are grinding higher, with ICE Brent close to $100/bbl as Middle East tensions escalate and OPEC output falls. They highlight US strikes on Iranian tankers, Iranian missile responses, and disruptions to Saudi supply, arguing that the market will likely keep a sizeable risk premium while flows through the Strait of Hormuz recover only gradually.

Brent nears $100 with OPEC cuts

“The oil market continues to move higher this morning as Middle East tension escalates. ICE Brent is close to breaking above $100/bbl. Given developments in the region, it seems only a matter of time before the market tests this key level.”

“The US carried out additional strikes on Iranian oil tankers near Kharg Island, hitting 5 vessels in response to Iran attempting to strike a US Navy warship. This resulted in Iran firing ballistic missiles towards Jordan, while also warning vessels in the Persian Gulf could be targeted. Recent developments only reinforce the view that we’re still some way from a restart in talks.”

“In the meantime, the market is likely to continue to price in a sizeable risk premium.”

“Preliminary production numbers for OPEC are starting to come in. A Bloomberg survey estimates output in August fell 900k b/d month-on-month to 19.91m b/d. The decline was driven by Saudi Arabia, where output is estimated to have fallen by 1.12m b/d amid the escalation seen through August.”

“China’s still‑sizeable crude inventories mean lower import levels are broadly sustainable — a dynamic the market may actually need, particularly if Middle East escalation triggers renewed supply disruptions.”