Oil jumps to $105 a barrel after Middle East tanker attacks escalate

By Robert Harvey

LONDON, Sept 10 (Reuters) - Oil prices jumped 4% on Thursday with benchmark Brent crude hitting $105 a barrel after the biggest spike in attacks on shipping since the Iran war began spurred trader concerns about supply disruptions.

Brent crude futures were up $4.05, or 4%, at $105.26 a barrel by 1215 GMT. U.S. oil topped $100 a barrel for the first time since May as West Texas Intermediate crude futures rose $3.99, or 4.15%, to $100.04. 

Brent prices have surged by more than 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.

Iran-aligned Houthis seized control of Yemen's port of Mocha on Thursday, posing further threat to Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.

"The recent run-up in prices lays bare the market’s approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer. If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated," PVM analyst John Evans said.

U.S. President Donald Trump warned that the U.S. may hit Iran's Pickaxe ​Mountain, located near its heavily damaged Natanz uranium enrichment facility, and said the war would likely last beyond the November midterm elections. 

Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the U.S. hit five Iranian oil tankers. Iran's Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.

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.

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, while a pullback in imports could temper market gains, ING said.

"For months the bearish case rested on soft Chinese demand," said David Jorbenaze, global oil market lead at commodities information provider ICIS. 

OPEC on Thursday lowered its forecast for world oil demand growth in 2026 to 380,000 barrels per day, a copy of its monthly report showed, marking the fifth straight downward revision.

OPEC oil output fell by 640,000 bpd in August, a Reuters survey found, as Saudi exports faced new disruptions due to the war in Iran and a U.S. blockade cut Iran's shipments.

(Reporting by Robert Harvey in London, Sethuraman NR in New Delhi; editing by Mark Potter and Jason Neely)