Key facts
- Brent crude oil surpassed $100 per barrel for the first time in six weeks.
- West Texas Intermediate (WTI) traded at $96.27.
- Houthi rebels attacked Saudi oil facilities, causing casualties.
- U.S. forces destroyed Iranian oil tankers in response to Iranian missile attacks.
- Prediction markets on Myriad and Polymarket show a significant shift towards higher price targets for crude oil.
- Diesel prices hit a record $5.94 per gallon.
Brent crude oil surged past $100 per barrel on Wednesday morning, marking the first time in six weeks the benchmark has reached this level, driven by escalating geopolitical tensions in the Middle East. West Texas Intermediate (WTI) also saw gains, trading at $96.27.
The price surge followed a weekend of heightened conflict, including Houthi rebel attacks on Saudi oil facilities early Tuesday, which reportedly wounded 73 people. In response to Iranian ballistic missile attacks on a U.S. warship, U.S. Central Command destroyed five Iranian oil tankers on Tuesday, after destroying three others on Saturday.
Prediction markets have reacted sharply to the increased risk. On Myriad, the market for crude oil reaching $120 has seen its share rise to 56.5%, a significant increase from trading within a few points of the $55 side since mid-August. The $120 side has been ahead since early September, with the market processing $12.7 million in volume since March.
Polymarket has experienced even more dramatic shifts. The probability of WTI touching $100 this month has climbed to 59%, a nine-point increase. The likelihood of WTI reaching $105 is now at 30%, up 25 points, while the probability of it reaching $90 has risen to 71%, up 21 points. Conversely, bets on lower prices have collapsed, with the market for WTI dropping to $85 down 33 points to 39%, and all lower price targets for September now in single digits. Myriad's market has no deadline, while Polymarket's closes at the end of September.
The rise in crude oil prices is also impacting refined products, with diesel reaching a record $5.94 per gallon on Wednesday. Gasoline averaged $4.22 per gallon. These increases come weeks before the U.S. midterm elections, posing a challenge for Republicans campaigning on affordability.