Oil prices experienced an uptick on Thursday due to mounting concerns over the extended closure of the Strait of Hormuz. The ongoing U.S.-Iran conflict has significantly impacted vital oil and gas flows from the Middle East, while production facilities have been forced to limit output.
By 01:41 GMT, Brent crude had increased by $1.67, or 2.05%, reaching $83.07 per barrel. Meanwhile, U.S. West Texas Intermediate crude saw a rise of $1.94, or 2.60%, bringing it to $76.60 per barrel.
The conflict between the U.S. and Iran escalated further on Wednesday following a U.S. strike on an Iranian warship near Sri Lanka. This development comes as U.S. Senate Republicans voiced support for President Donald Trump’s military actions against Iran, voting against a bipartisan resolution that sought to halt the air campaign and require congressional authorization for hostilities.
Iraq, the second-largest oil producer within the Organization of the Petroleum Exporting Countries (OPEC), has reduced its output by approximately 1.5 million barrels per day due to a lack of storage facilities and export routes, as disclosed by officials to Reuters.
In the Gulf, Qatar, the leading producer of liquefied natural gas, declared force majeure on its gas exports on Wednesday. Sources indicated that a return to normal production volumes could take at least a month.
Shipping through the Strait of Hormuz, a crucial passage for nearly one-fifth of global energy consumption, has nearly come to a standstill for the fifth consecutive day amid the conflict with Iran and Tehran’s retaliatory actions.
The UK’s maritime trade operations agency reported a significant explosion, which was both heard and seen by the captain of a tanker anchored 30 nautical miles southeast of Kuwait’s Mubarak Al Kabeer. A small craft was later observed leaving the area.
J.P. Morgan noted that while Iran has avoided targeting most critical energy infrastructure, the risk for shipping remains extremely high. The firm estimated that approximately 329 oil vessels are currently stuck in the Gulf. It further commented that the storage capacity within the Gulf Cooperation Council countries and prevailing energy prices are key factors limiting the duration of the U.S. campaign.
This reference pertains to the political and economic alliance comprising Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain.
J.P. Morgan also stated that most oil fields could resume operations within days, with full capacity typically restored within two to three weeks. “While operators must gradually rebuild reservoir pressure, especially in Iraq where water injection is crucial, the primary constraint today is logistics rather than geology,” the firm added.
