Oil prices climb 3.5% as Brent tops $101 amid US-Iran tensions

Oil prices climbed 3.5% on Wednesday, with international benchmark Brent crude exceeding $101 per barrel as escalating tensions between the US and Iran intensified concerns over disruptions to global energy supplies.

Brent crude traded at $101.20 per barrel as of 1530GMT.

Prices extended gains after the US and Iran exchanged further attacks, raising fears of additional disruption to crude flows through the Strait of Hormuz, one of the world's most important oil transit routes.

The US military struck three Iranian oil tankers over the weekend after Tehran launched ballistic missiles toward two US Navy warships.

Iran also warned crews near Kuwaiti and Bahraini ports to abandon their vessels, further heightening concerns over maritime security and regional oil shipments.

The latest escalation added to existing supply risks after Iran-backed Houthi forces targeted energy infrastructure in southern Saudi Arabia, including the Jazan refinery, which has a processing capacity of about 400,000 barrels per day.

Market participants remain focused on developments around the Strait of Hormuz, through which a significant share of global crude oil and petroleum product shipments passes.

Any prolonged disruption to tanker traffic along the waterway could tighten global supplies and push energy prices higher.

Oil prices were also supported by recovering demand from China. Supply disruptions in the Gulf have prompted Chinese refiners to seek alternative crude from producers in Africa, Canada and Latin America.

The shift toward more distant suppliers is expected to increase transportation costs and competition for crude grades outside the Middle East.