Oil hits $108 a barrel as Israel attacks Iranian energy sites

Brent crude topped $108 a barrel Wednesday after Israel struck Iranian gas infrastructure, sending oil prices up more than 4%. The latest escalation came as the Strait of Hormuz closure continues to disrupt global energy flows.

Brent crude traded at $108.15 per barrel, a 4.57% advance on the day. West Texas Intermediate was at $98.27 a barrel, up 2.14%.

The strikes hit Iran's largest gas processing complex in Bushehr Province, CNBC reported. State television in Iran reported that the South Pars gas field and oil infrastructure at Asaluyeh were among the targets, according to Bloomberg. Iran pledged to retaliate by striking energy infrastructure in neighboring countries. Iran also launched additional attacks on energy facilities in the United Arab Emirates this week, according to CNBC.

The Strait of Hormuz — through which roughly one-fifth of global oil and LNG shipments pass — remains effectively shut. Citi has estimated that daily supply losses of 11 million to 16 million barrels are possible over the coming four to six weeks, a shortfall that could lift Brent to $110 to $120 per barrel, according to CNBC. A deeper disruption — extended outages or expanded strikes on energy infrastructure — could push Brent to a $130 average in the second and third quarters, with peaks as high as $150, or $200 once refined products are included, Citi said.

Brent has gained roughly 80% this year, according to Bloomberg. The spread between U.S. and global crude benchmarks reached its widest point in nearly four years Wednesday, with WTI trading at a discount exceeding $11 a barrel to Brent — driven in part by hedging tied to emergency stockpile releases, according to Bloomberg.

"With no end in sight to hostilities, shut-ins rising on a daily basis, and the Strait technically closed, we remain of the view that Brent is set to remain in a new, higher $95-to-$110 range," Robert Rennie, head of commodity research at Westpac Banking Corp., told Bloomberg.