Pressure mounts for the Gulf of Hormuz to reopen: File Image/Pixabay

Escalating oil prices were again the prime focus of concern on Thursday, with Brent and West Texas Intermediate reaching record highs before retreating to the $100 mark and Dubai crude prices surpassing $166 per barrel.

Natasha Kaneva, JPMorgan’s head of commodities research, pointed out that the Dubai price reflects the severity of oil shortages in the Persian Gulf as the war between Iran and the U.S. maintains its ferocity and the Strait of Hormuz remains blocked – and she warned that if the Strait doesn’t reopen, the U.S. market will be severely impacted as well.

“Brent and WTI will ultimately reprice higher as Atlantic basin inventories are drawn down and the global market is forced to clear at a materially tighter supply level,” she said.

Brent on Thursday settled at $108.65 per barrel, up only 1.2 percent from the day before, but after rising above $119; West Texas Intermediate settled at $96.14 after briefly topping $101.

Tuesday’s mid-trading spikes were said to be caused by Iranian attacks on oil and gas facilities around the Persian Gulf, after Israel attacked an important Iranian natural gas field – deepening fears that the war could destroy Middle Eastern oil and gas production for a long period.

Late Thursday, and at the request of U.S. president Donald Trump, Israeli prime minister Benjamin Netanyahu said his country will suspend any further attacks on the Iranian gas field.

But analysts noted that prices could climb much higher if nothing is done to reopen the Strait, and Vandana Hari, the founder of Vanda Insights, told media, “Benchmark Middle Eastern crudes like Oman and Dubai have already crossed the $150 threshold, so $200 is already within sight, even if not for Brent and West Texas Intermediate.

“How much further crude climbs from here almost entirely hinges on how much longer the Strait of Hormuz remains closed.”

For its part, Singapore-based OCBC Group Research estimated that the global market is experiencing a shortfall of about 10 million barrels daily, even when emergency reserves are taken into account.

Chad Norville, president of industry publication Rigzone, said, “In several respects, the conditions today could allow for an even more dramatic move than the Gulf War, given the larger share of global supply potentially at risk and the wider imbalance between supply and demand that presents.”