Crude Oil Extends Rally

Crude oil rose above $100 a barrel on Thursday, reaching its highest level since May 19, as escalating tensions in the Middle East raised fears of prolonged disruption to global energy supplies. Iran signalled it will continue retaliatory strikes if US attacks persist, while Iran-backed Houthi forces are targeting Saudi assets and threatening shipping routes. Saudi Arabia’s crude oil production fell sharply in August 2026, dropping by around 1.9 million barrels a day to 6.238 million barrels a day, its lowest level since 1990. The deteriorating backdrop from the Middle East dims expectations that supply from the region could be normalized as Asian economies are forced to re-enter the energy market. China imported 8.93 bpd of crude oil in August, a 6.2% increase from July, after its reliance on inventory since the start of the conflict shielded the global economy from a deeper energy shortage due to blockaded tankers in the Persian Gulf.

Crude oil rose past $97 per barrel on Thursday, the highest in over three months and soaring nearly 15% since the start of September, as escalatory strikes between Iran and the US further supressed supply from the key region. Tehran signaled it will not back down from a military blockade as the US launched attacks against a series of Iranian tankers near Kharg Island, host to the state's key energy infrastructure. The deteriorating backdrop from the Middle East dims expectations that supply from the region could be normalized as Asian economies are forced to re-enter the energy market. China imported 8.93 bpd of crude oil in August, a 6.2% increase from July, after its reliance on inventory since the start of the conflict had shielded the global economy from a deeper energy shortage due to blockaded tankers in the Persian Gulf. Inventories were also lower in the US, with the government's SPR hovering at a record low.

Crude oil traded around $96 per barrel on Thursday, hovering at its highest level since May as the intensifying conflict between the US and Iran raised concerns over further disruptions to energy supplies from the Middle East. Iran said it was ready for a more intense conflict, vowing to resist the US naval blockade and warning that it would intensify its attacks if American forces continued strikes on Iranian territory. Meanwhile, President Donald Trump predicted that the conflict would not end until after the November midterm elections and said significant relief in gasoline prices was unlikely before then, signaling limited prospects for near-term de-escalation. Hostilities intensified over the past week following roughly a month of relative calm, with both sides stepping up attacks. The conflict broadened after Iran-backed Houthi militants attacked several energy facilities in Saudi Arabia, prompting a temporary suspension of some operations.