Oil price rises back above $100 a barrel as energy market may be past ‘point of no return’

Oil rose back above $100 a barrel on Tuesday, after fresh US strikes on Iran dashed hopes of a Middle East breakthrough, with experts saying that whatever the outcome of peace talks, the global energy market may now be past the “point of no return”.

News of the US attacks on missile launch sites and mine-laying vessels pushed the price of Brent crude past the key threshold on Tuesday, as a peace deal remained elusive.

The conflict and resulting blockade of fossil fuel shipping through the strait of Hormuz have sent oil soaring, topping $126 at the end of last month.

However, in recent weeks prices have remained significantly below predictions as traders have continued to bet on a diplomatic solution to hostilities that could allow Gulf states to restart production and exports of crude. On Monday, Brent had been trading at about $97 a barrel.

Market observers say weeks of disruption to oil exports have heavily eroded global stockpiles of crude and fuel, while demand for transport fuels is expected to increase over the summer travel season.

Analysts at HFI Research said last week that the market had “reached the point of no return” and could be due a “rude awakening” by the start of next month.

“It just seems to be this endless loop of Charlie Brown and Lucy with the football,” said Michael Every, a global strategist for economics and markets at the Dutch lender Rabobank.“Every single time, it’s ‘oh, this time is the breakthrough. This time, the energy will flow.’ And at any one given time, it could be right. But so far, repeatedly, it hasn’t been.”

The head of the International Energy Agency, Fatih Birol, said last week that the world could hit a “red zone” in July and August by using far more oil than countries were producing, meaning further emergency measures may be required.