By Sethuraman N R
NEW DELHI, Sept 10 (REUTERS) – Oil prices dipped on Thursday but Brent crude remained above $100 a barrel as traders braced for deeper supply disruptions after Iran and the United States launched their largest attacks on shipping since their six-month-old conflict began.
Brent crude futures were down 0.7% to $100.50 a barrel by 0619 GMT. U.S. West Texas Intermediate crude was at $95.58, down 0.5%.
Brent prices have surged nearly 30% from lows touched in early August as a permanent agreement between the U.S. and Iran to cease attacks never materialised and fighting resumed later in the month.
Iran said on Wednesday it had attacked 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers, and Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
President Donald Trump warned on Wednesday that the United States may hit Iran’s Pickaxe Mountain, urging Tehran to be cautious.
“Renewed hostilities between the U.S. and Iran, after nearly a month of relative calm, have once again lifted the geopolitical risk premium in crude oil,” said Sugandha Sachdeva, the founder of SS WealthStreet, a New Delhi-based research firm.
Oil flows through the Strait of Hormuz, the waterway that before the war carried roughly a fifth of global oil and gas supplies, remain far below pre-war levels.
Pressure is mounting on alternative channels for Gulf oil exports, with Iran-aligned Houthi militants stepping up strikes against Saudi Arabia, threatening crude shipments via the Red Sea.
While fears of prolonged and more severe supply disruptions in the Gulf have lifted Brent above $100, analysts say the durability of the rally will hinge on China.
In the physical crude oil market, the dated Brent oil benchmark, against which roughly two-thirds of supply is priced, has been above $100 since September 3, according to LSEG data.
China, the world’s largest crude importer, has stepped up purchases in recent weeks after months of subdued demand, boosting physical crude markets, ING analysts said in a note.
If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, but a pullback in imports could temper the market’s gains, ING said.
(Reporting by Sethuraman NR; Editing by Christopher Cushing, Lincoln Feast and Kim Coghill)
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