Oil prices surge above $100 as Middle East conflict threatens supply

Global oil prices are on course to end the week above $100 a barrel for the first time since mid-May as escalating conflict in the Middle East raises fears of prolonged disruption to major energy shipping routes.

International benchmark Brent crude was trading around $106 a barrel on Friday, while US West Texas Intermediate (WTI) stood above $101, after both benchmarks surged more than 6% on Thursday. They remain more than 10% higher for the week.

Brent had climbed as high as $109.97, its highest level in about four months, before retreating on reports that Middle Eastern foreign ministers were exploring a temporary arrangement with Iran over shipping through the Strait of Hormuz.

The Strait of Hormuz has become the main pressure point for the oil market. Vessel transits fell to seven on Thursday from 11 a day earlier, compared with a 10-day average of 15, according to preliminary ship-tracking data cited by Reuters.

Before the Iran war began in late February, roughly one-fifth of global daily oil and liquefied natural gas supplies passed through the strait.

Tensions intensified after Iran said it attacked 10 ships near Hormuz on Wednesday following US strikes on five Iranian oil tankers.

Iran-aligned Houthis also seized Yemen's port of Mocha on Thursday, increasing risks to Red Sea shipping and widening concerns that disruption could extend beyond the Persian Gulf.

The International Energy Agency on Friday said the prolonged Iran conflict was delaying a return to normal Middle Eastern oil flows into 2027. It now expects global oil supply to fall by 5.7 million barrels per day this year.

The oil shock is also feeding into inflation expectations. US diesel prices have exceeded $6 a gallon for the first time, while government bond yields have risen as markets price in the possibility of further interest-rate increases by major central banks.

For Bangladesh, the surge comes while domestic fuel prices remain unchanged.

The government last reviewed prices for September on August 31 and decided to keep the existing rates effective from September 1. Diesel remains at 115 taka per litre, octane at 145 taka, petrol at 140 taka and kerosene at 135 taka.

Those retail prices were last actually revised on May 31 and took effect on June 1, when octane, petrol and kerosene were increased by 5 taka per litre. Diesel was kept unchanged at 115 taka. The government subsequently maintained the same rates for July, August and September.

Bangladesh has operated an automatic fuel-pricing mechanism since 2024, under which prices are reviewed monthly based on international prices, import costs, the dollar exchange rate, taxes and duties, VAT, Bangladesh Petroleum Corporation margins and distribution costs.

The latest international surge therefore comes after Bangladesh's September prices were fixed, putting the next monthly review under pressure if crude and refined-product prices remain elevated.

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