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Oil moved higher on a thin day of holiday trading as risks to oil flows through the Strait of Hormuz continued to support prices, alongside the return of Chinese crude purchasing.
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Brent briefly topped US$98 a barrel, before easing slightly. Iran said that a deal with Oman to manage shipping through Hormuz is imminent, raising questions over how the US would respond after it struck Iranian vessels over the weekend. Tehran also warned that ships face the risk of attack near the Oman coastline.
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Separately, Saudi Aramco’s oil facilities in Jazan came under fresh attack on Monday, according to people familiar with the matter. It was the latest in a series of strikes that have already forced a major refinery in the area to shut operations.
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The continued price risks stemming from the Middle East conflict are being amplified by a return of Chinese buying. A rebound in Beijing’s purchases has driven up the price of barrels from West Africa to Canada in recent days. Earlier in the war, China’s oil-buying hiatus was one of the key factors quelling prices.
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As a result, oil now finds itself on the precipice of $100 a barrel for the third time this year, with Brent crude up about 60% so far in 2026. Refined products such as diesel have posted even steeper gains amid the six-month conflict and separate supply disruptions caused by the Russia-Ukraine war.
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“The pace at which inventories are drawing down has accelerated so much in crude just over the last couple of weeks,” Amrita Sen, co-founder and director of research at Energy Aspects, said in a Bloomberg TV interview. “I really think crude is poised to take a significant leg higher.”
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Monday’s trading session was relatively subdued because of the US Labor Day holiday. The start of a major conference in Singapore also drew traders away from their desks. The Iran war, tightening global inventories and China’s demand outlook are expected to dominate the agenda at the Asia-Pacific Petroleum Conference.
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Hedge funds have turned the most bullish on Brent since May after the recent flare-up between the US and Iran, increasing their net-bullish positions in the week ended Sept. 1. Net-long wagers on US crude rose to the highest since June.
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“In an upside price scenario, where shipping attacks broaden and intensify, we see Brent potentially reaching $120,” Daan Struyven, co-head of global commodities research at Goldman Sachs Group Inc., said in a Bloomberg TV interview. “The events of the last few days do suggest that the risk of shipping disruptions broadening and intensifying is an important one.”
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