Oil Rises Above $115 a Barrel on Fears of Renewed US Strikes on Iran
Brent crude hits its highest level since May as Tehran threatens Gulf oil, cable and datacentre sites
By AXY Business Desk ·
Key points
- Brent crude rose 1% to above $115 a barrel on Friday, its highest level since May.
- Iran threatened to attack oil facilities, undersea cables, datacentres and AI facilities in the Gulf if a new US-Israeli offensive is launched.
- Markets are reacting to reports the US may consider strikes on Iran after the 3 November elections.
- Iran's Revolutionary Guards claimed to have struck four commercial ships in the Strait of Hormuz on Wednesday.
- Oil had been about $72 a barrel in February and reached $126 by the end of April.
Oil prices climbed to their highest level in more than five months on Friday, as fears of a wider escalation in the Middle East conflict gripped energy markets. Brent crude, the international benchmark for oil, rose 1% in the morning to above $115 a barrel, its highest level since May. The jump followed a threat from Tehran, which said it would attack oil facilities, undersea cables, datacentres and AI facilities in the Gulf region if a new US-Israeli offensive is launched against Iran.
For ordinary readers, the price on a trading screen is only the start. Brent is the reference price against which many of the world's oil supplies are bought and sold, so when it moves, the effect runs through petrol stations, airlines, shipping firms and the cost of goods that need fuel to make and move. A rise of 1% may sound small, but at these levels it adds real money to every barrel bought or sold that day.
Tehran's Threat Against Gulf Energy and Data Sites
The threat matters because of what it targets. Refineries, pipelines and export terminals in the Gulf sit at the centre of global oil supply. Undersea cables carry most of the world's international internet traffic, linking continents through lines laid along the seabed. Datacentres and AI facilities host the computing power that banks, airlines, hospitals and online shops rely on every day. Tehran's list covers all of these, which is why the warning reached well beyond the oil market.
Oil is priced on expectations as well as on barrels already in storage. When buyers believe supply could be cut off, they bid up prices now to protect themselves against shortages later. That is why a threat, not a single attack, was enough to push the price higher on Friday morning. Traders were pricing in the chance that the threat would be carried out, and getting that call wrong in either direction is expensive.
A strike on infrastructure of this kind would not stay in one place. Damage to a refinery could cut fuel output for a long time. Damage to a subsea cable could slow internet and financial traffic between regions. A hit on a datacentre could knock out online services used by people far from the Gulf. Those are the risks sitting behind the move in the oil price.
How the Iran War Pushed Oil From $72 to $126
The current spike sits on top of a much larger rise. Oil had traded at about $72 a barrel in February, before the Iran war began. By the end of April it had soared to $126 a barrel. The price has since come down from that peak, but at above $115 it remains far above where it stood before the conflict.
Richard Hunter, of the broker Interactive Investor, pointed to how long the conflict has now run. He said: "Widespread reports that the US is considering renewed military strikes on Iran after the midterm elections rather than pursuing a diplomatic route was enough for the price to pop, after what many had considered would be a brief conflict is now in its eighth month."
Hunter's remark points to an uncomfortable reality. Many people had expected the conflict to be short. Instead, it is now in its eighth month, and every new report about the next phase resets the risk premium that traders add to the price of oil. A risk premium is the extra amount buyers pay to cover the chance that supply will be disrupted.
That history helps explain why the market is so sensitive. Consumers and companies have already lived through a period of very high energy costs. A new escalation would arrive on top of that, leaving less room for prices to absorb another shock. Fuel costs feed into transport, manufacturing and food prices, so a sustained rise would reach households far beyond people who buy oil directly.
Why the 3 November Elections Hang Over Oil
The timing of the expected strikes is driving much of the nervousness. Hunter's comment referred to reports that the US is considering renewed military strikes after the midterm elections, rather than pursuing a diplomatic route.
Susannah Streeter, chief investment strategist at the broker Wealth Club, said fears were rising that American and Israeli forces would be ordered to launch strikes on Iran's energy infrastructure after the US elections on 3 November. That would move the question beyond military action in general. Markets would be watching for direct damage to the oil system itself, because that is where supply is most exposed.
US midterm elections are the national votes held in the middle of a president's term, when all seats in the House of Representatives and a share of Senate seats are contested. The timing matters because a major decision can be delayed until after a vote. That is why traders are reading the political calendar as closely as the news from the region.
Ships Under Fire in the Strait of Hormuz
The Strait of Hormuz is a narrow sea passage between Iran and the Arabian Peninsula, and it is one of the most closely watched choke points for oil shipments. Tankers that pass through it carry crude and fuel to buyers in Asia, Europe and beyond. When that route is disrupted, prices tend to respond quickly.
Iran's Islamic Revolutionary Guards Corps claimed to have struck four commercial ships in the strait on Wednesday. Streeter said ships trying to cross the passage still face a dangerous journey, with projectiles still being fired.
For shipowners, insurers and crews, that means higher risk and higher costs, even when a vessel is not hit. Some ships may avoid the route, delay sailings or demand higher freight rates, and those costs can filter through to the price of fuel. Insurance is the cover that pays for losses to a vessel or its cargo, and when the risk rises, the premium rises with it.
Saudi Arabia, Houthi Attacks and the Diplomat Order
Saudi Arabia has become a second focus of concern. Streeter said attacks on Saudi Arabia's facilities by Houthi rebels in Yemen had intensified this week. The US State Department has ordered some diplomats and the families of US government employees to leave Saudi Arabia.
Saudi Arabia is one of the world's largest oil producers, so attacks on its facilities go straight to the supply question. An order for diplomats and families to leave is a sign of how seriously Washington is treating the threat to the kingdom. Markets tend to read such moves as a warning that conditions could worsen quickly.
The Houthis are an armed group based in Yemen, a country that borders Saudi Arabia to the south. Their attacks add another layer to a region where several threats are now running at once.
Diesel Strain From Ukraine's Strikes on Russian Refineries
The Middle East is not the only source of supply worry. Streeter said Ukraine's bombardment of Russian diesel refineries was also adding to concerns about supply. Diesel powers trucks, farm machinery, ships and many heating systems, so a squeeze on diesel is felt quickly in transport and agriculture.
The combination gives this week its weight. Tensions in the Gulf, attacks on shipping, pressure on Saudi facilities and damage to Russian refining capacity all point the same way: less spare supply for buyers who need fuel. Each development alone might move prices. Together, they make it harder for markets to settle, and they leave less margin for error if any one of them worsens.
What a Sustained Oil Price Above $115 Would Mean
Households feel oil through petrol and diesel at the pump, through heating bills and through the cost of goods trucked to shops. Businesses feel it in transport and manufacturing costs. For airlines and shipping firms, fuel is among the largest costs they carry, so a long period of high prices would press on fares, freight charges and margins.
The pain would not arrive evenly. Households with long commutes or heating bills that rise in winter would feel it sooner than those who rarely drive. Smaller firms with thin margins would have less room to absorb higher fuel bills than large companies that can hedge, which means locking in prices in advance.
What the US Decision and Iran's Threat Could Trigger
What happens next depends on two things. The first is whether the US moves ahead with strikes after the 3 November elections. The second is whether Iran carries out its threat against Gulf energy and digital infrastructure. Those are the two switches most likely to change the market. A diplomatic route, which Hunter's comments set against military action, remains the other path, and the next test is whether it gains ground before that date.
If strikes go ahead and energy sites are hit, oil could move well beyond current levels, and the damage could reach undersea cables and datacentres far from the Gulf. If diplomacy takes hold, prices may ease. Even then, attacks on shipping in the Strait of Hormuz and on Saudi facilities suggest the risk would not disappear quickly.
The Strait of Hormuz and the attacks on Saudi Arabia are the early signals to watch. They could shift well before any formal decision in Washington, and they would show whether the threat to supply is growing or easing.
Questions and answers
Why did oil prices rise above $115 a barrel?
Brent crude rose 1% to above $115 a barrel on Friday after Iran threatened to attack oil facilities, undersea cables, datacentres and AI facilities in the Gulf if a new US-Israeli offensive is launched. Reports that the US is considering renewed strikes after the midterm elections also drove the move.
When could the US renew strikes on Iran?
Susannah Streeter of Wealth Club said fears were rising that American and Israeli forces could be ordered to strike Iran's energy infrastructure after the US elections on 3 November. Reports say the US is considering renewed military strikes after the midterm elections rather than pursuing a diplomatic route.
Why does the Strait of Hormuz matter for oil?
The Strait of Hormuz is a narrow sea passage between Iran and the Arabian Peninsula, and tankers carry crude and fuel through it to buyers in Asia, Europe and beyond. Iran's Revolutionary Guards claimed to have struck four commercial ships there on Wednesday, raising risks for shipping and fuel supply.
How high did oil prices go during the Iran conflict?
Oil had traded at about $72 a barrel in February, before the Iran war began, and soared to $126 a barrel by the end of April. Brent's rise to above $115 on Friday was its highest level since May.
Topics: Brent crude, oil prices, Iran, United States, Strait of Hormuz, Saudi Arabia, Houthi rebels, Ukraine
Sources: The Guardian Business