Brent crude nears $100 as US-Iran strikes stoke supply worries

Oil prices climbed on Wednesday as rising hostilities between the United States and Iran intensified concerns over potential disruptions to Middle East energy supplies.

Key price movements:

• West Texas Intermediate (October delivery): Rose 1.75% to $94.66 per barrel
• Brent crude (international benchmark): Gained 1.55% to $99.44 per barrel

Military Action

The U.S. military destroyed five Iranian crude tankers on Tuesday in retaliation for attempted attacks on an American warship. According to a statement from CENTCOM, the U.S. warship successfully evaded the attack, and no American personnel were harmed.

Market Outlook

The U.S.-Iran conflict, now in its seventh month, is increasing the risk of oil prices surging above $120 per barrel as attacks on shipping intensify, according to Daan Struyven, co-head of global commodities research at Goldman Sachs.

"It's definitely plausible," Struyven told CNBC's "Squawk Box Asia" when asked whether oil could reach $120 per barrel.

Goldman Sachs maintains a base case that Persian Gulf exports will gradually recover as producers adapt to disruptions through alternative shipping routes and eventually additional pipeline capacity. However, Struyven noted that the recent escalation has increased the likelihood of a more bullish scenario.

"The developments over the last few days do suggest that the probability of that alternative upside price scenario—where exports actually stagnate over the coming few months and where Brent exceeds $120—is definitely going up as we're seeing an intensification and broadening of the shipping attacks," Struyven said.

Background

U.S.-Iran military action had been paused for approximately one month, with Washington shifting focus to applying economic pressure on Tehran. Strikes resumed toward the end of last month.