Brent oil, the crude oil of the Gulf countries, has touched the $110 per barrel level for the first time since May. Hopes of an imminent supply relief are fading, leading traders to bet on further price hikes before the end of the week. Brent rose 3.7%. The bullish trend in the market strengthened as news of the ongoing conflict emerged in major export hubs. Iran-backed Houthi rebels are constantly attacking Saudi Arabia with missiles and drones, while Russia and Ukraine are targeting each other’s energy infrastructure.

Opposition to Russian diesel in America

On Friday, US lawmakers introduced a bill aimed at blocking an agreement between President Donald Trump and Moscow, under which several 100 million barrels of diesel were to be released. The move is a sign of strong opposition to any such move, which could give Russia an opportunity to bolster its war chest. If Russian diesel is excluded from global markets, refineries elsewhere will have to increase oil processing to meet demand. Trump has reiterated that Moscow will implement the deal to drop diesel. Continued tensions around the Black Sea — including a recent attack on Russia’s Ryazan oil refinery that forced the shutdown of operations there — have raised further doubts about the deal’s completion, Reuters reports.

Oil has become expensive by 70 percent

Crude oil prices have increased by more than 70 percent this year. Supply disruptions due to ongoing wars in the Middle East and Russia have pushed up prices. There are also signs of distress in the physical markets. Prices of refined products such as diesel have increased sharply. Futures prices for the commodity in Europe have more than doubled this year. Analysts are closely watching events in the Persian Gulf to see if the conflict is escalating.

The conflict may become more intense

In an interview with Newsmax, Trump did not rule out the possibility of using what he called the “mother of all bombs” on Iran after the Nov. 3 election. CNN reported earlier this week that the US planned an attack that could include the use of highly powerful bombs, such as the GBU-43/B ‘Massive Ordnance Air Blast Bomb’ (MOAB). Analysts at the Eurasia Group wrote in a note that “the conflict is likely to escalate further. They raised the probability of it escalating to 65 percent from 35 percent. They said it is no longer possible for the US to maintain the current state of stalemate.”