Oil prices surged on Thursday following increased attacks by Iran on oil and transport facilities across the Middle East. These developments have heightened fears of a prolonged conflict and potential disruptions to oil flow through the Strait of Hormuz.
Brent crude futures rose by $8.54, or 9.28%, reaching $100.52 per barrel at 0354 GMT. Meanwhile, U.S. West Texas Intermediate crude climbed $7.22, or 8.28%, to $94.47 per barrel. Earlier in the week, Brent prices had soared to $119.50 per barrel, a peak not seen since mid-2022, before declining after U.S. President Donald Trump indicated that the conflict with Iran might soon conclude.
On Wednesday, an Iranian military spokesperson warned, “Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilized,” in comments aimed at the U.S.
According to ING analysts, there are no indications of de-escalation in the Gulf region, and consequently, there is no foreseeable end to the disruptions affecting oil flows through the Strait of Hormuz. “The only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz,” they stated. “Failing to do so means that the market highs are still ahead of us.”
In a related incident, two foreign tankers loaded with Iraqi fuel oil were attacked by unidentified assailants in Iraq’s territorial waters, resulting in fires aboard the vessels. Farhan al-Fartousi, director general of the General Company for Ports, confirmed the attacks on Wednesday. Initial investigations by Iraqi security officials suggest that explosive-laden boats from Iran targeted the tankers.
The International Energy Agency (IEA) has agreed to release a record 400 million barrels of oil in an effort to curb the price spikes following the outbreak of the U.S.-Israeli conflict with Iran. The U.S. is providing a significant portion of this release, contributing 172 million barrels from its Strategic Petroleum Reserve.
Tina Teng, a market strategist at Moomoo ANZ, cautioned, “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.”
ING analysts further expressed concerns regarding the speed at which the released oil can reach the market and whether it will be enough to support consumers until regular oil flow resumes through the Strait of Hormuz.
