– Iranian boats attacked two tankers in Iraqi waters, port officials said
– Shipping through Strait of Hormuz still halted
– IEA proposed release of 400 million barrels may offer only limited relief, analysts say
London — Oil prices rose sharply on Thursday as Iran stepped up attacks on oil and transport facilities across the Middle East, fuelling concerns of a prolonged conflict and potential disruptions to oil flows through the Strait of Hormuz.
Brent futures climbed $4.90, or 5.33%, to $96.88 a barrel by 1107 GMT, having hit $100 per barrel in earlier trading, while U.S. West Texas Intermediate crude was up $4.27, or 4.89%, at $91.52.
Brent hit $119.50 a barrel on Monday, its highest since mid-2022, then dropped after U.S. President Donald Trump said the Iran war could be over soon.
The war in the Middle East is causing the biggest oil-supply disruption in the history of global markets, the International Energy Agency said on Thursday, a day after approving the release of a record volume of 400 million barrels of oil from strategic stockpiles.
Middle East Gulf countries have cut total oil production by at least 10 million barrels per day – a volume equalling almost 10% of world demand, the agency said in its latest monthly oil market report.
“The IEA’s release of oil reserves may be only a temporary solution, as disruptions to oil shipments through the Strait of Hormuz and a major production halt in some Middle Eastern countries could cause a long-term supply crunch,” said Tina Teng, market strategist at Moomoo ANZ.
Goldman Sachs forecast Brent crude prices would average $98 per barrel in March and April before declining to $71 by the fourth quarter, but warned that in an upside-risk scenario, where flows through the strait are disrupted for a month, the March and April average could surge to $110.
“The only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz,” ING analysts said. “Failing to do so means that the market highs are still ahead of us.”
Explosive-laden Iranian boats appear to have attacked two fuel tankers in Iraqi waters, setting them ablaze and killing one crew member on Wednesday after projectiles struck four vessels in Gulf waters, according to port, maritime security and risk firms.
Lebanon’s Hezbollah launched its biggest rocket salvo of the current war on Wednesday night, prompting Israeli strikes that shook Beirut. Hezbollah’s attack also raised fears about Yemen’s Houthis joining the war alongside Iran, in a potential development that could further disrupt Red Sea shipping. Saudi Arabia has ramped up crude exports from its Red Sea port of Yanbu in recent days.
Also on the supply side, China has ordered an immediate ban on refined fuel exports in March, a further step to preempt a potential domestic fuel shortage caused by the Middle East conflict, sources said on Thursday.
*Enes Tunagur, Sam Li & Siyi Liu; editing: Joe Bavier & Pooja Desai, Kirsten Donovan – Reuters
