Oil hits $100 again as Middle East tensions escalate

The price of a barrel of North Sea Brent crude reached $100 on Wednesday—for the first time since late July—as hostilities in the Middle East intensified. Brent for November delivery briefly hit $100.19. Its U.S. equivalent, West Texas Intermediate (WTI) for October delivery, rose 1.46% to $94.39.

"The $100 threshold is a psychological level that carries weight in the markets," Kathleen Brooks, an analyst at XTB, told AFP.

The $100 threshold: Key to Central Bank rate hikes

Once that level is surpassed, "many central banks will have no choice but to raise their interest rates" to control inflation, she added. This could "increase [financing] costs for businesses and individuals," with a consequent impact on economic activity, she noted.

This was reiterated by Fawad Razaqzada, a market analyst at FOREX.com: "The ongoing conflict in the Middle East is fueling concerns about supply disruptions, which in turn worries investors about the inflationary consequences of rising oil prices."

"For the Federal Reserve, the combination of a resilient U.S. labor market and renewed pressure from energy prices are hard-line signals. A sustained rise in oil prices could reverse the progress on inflation that policymakers have relied on to justify lowering interest rates, while also putting pressure on consumers and businesses."

Renewed escalation in the Middle East

The price surge reflects rising tensions in the Middle East, where, in addition to the resumption of fighting between the U.S. and Iran, with no negotiations in sight—has been compounded by an exchange of attacks between Saudi Arabia and Houthi rebels following attacks by Iran-aligned terrorists on Saudi oil tankers and territory.

The Revolutionary Guards, the Iranian regime's elite military force, said Wednesday that they attacked a U.S. military base in Jordan. The U.S. responded to the Revolutionary Guards' attempt to attack a warship by sinking five Iranian oil tankers, to which Tehran retaliated by attacking up to 20 vessels in the area.