Oil prices rose sharply on Thursday as concerns over supply disruptions in the Middle East intensified amid increasing attacks on commercial shipping in the Gulf and the Strait of Hormuz.
Brent crude futures gained $2.28, or 2.28%, to reach $102.28 a barrel by 0427 GMT. US West Texas Intermediate (WTI) crude futures rose $1.66, or 1.88%, to $89.94 a barrel.
The gains came a day after oil prices settled lower following an agreement by the International Energy Agency (IEA) to accelerate the release of oil stocks and prioritise diesel supplies as governments seek to address record fuel prices and disruptions linked to the ongoing Iran war.
Strait of Hormuz risks keep oil markets under pressure
Concerns over shipping through the Gulf and the Strait of Hormuz have intensified as the conflict involving Iran enters its eighth month.
Before the war, the strategic waterway handled shipments equivalent to around 20% of global oil and fuel consumption, making any prolonged disruption a major concern for energy markets.
Attacks on tankers passing through the Strait of Hormuz reached their highest weekly level since the beginning of the war last week, even as Gulf producers increased exports.
In the latest reported incident, a tanker north of Qatar was struck by multiple projectiles, causing casualties, according to the United Kingdom Maritime Trade Operations agency.
Saul Kavonic, head of energy at MST Marquee, said the frequency of attacks on ships had reached its highest level since the war began and could increase further.
He said constrained product flows, higher logistics costs and the risk of further escalation were keeping oil prices elevated.
IEA stock release offers temporary relief
ANZ analyst Daniel Hynes said the IEA’s planned oil release would likely include barrels already covered by its original 400-million-barrel release plan announced at the beginning of the Middle East conflict.
He said the move therefore did not appear to represent an additional draw from strategic inventories.
“Ultimately, strategic stock releases can augment supply flows temporarily but do not create new production capacity,” Hynes said.
The release is expected to provide some short-term support to supply, but concerns about production and transportation capacity continue to weigh on the market.
Oil Prices Near $97 as US-Iran Attacks Raise Fears of Prolonged Supply Disruptions
Hurricane threatens US offshore production
Supply concerns were also heightened by a hurricane approaching offshore production areas in the Gulf of Mexico.
Shell and Chevron said Wednesday that they were curtailing offshore operations as Hurricane Isaias approached the region.
According to the US Marine Minerals Administration, Gulf of Mexico oil and gas producers had shut in around 25.08% of current oil production and 16.37% of natural gas production as of Wednesday because of the storm.
The disruptions add another source of uncertainty for global energy markets at a time when traders are already closely monitoring developments in the Middle East.
US inventories provide additional support
US inventory data also supported oil prices after crude stockpiles declined more than analysts had expected.
The US Energy Information Administration said crude inventories fell by 3.2 million barrels to 424.1 million barrels during the week ended October 2.
The decline was larger than the 1.7-million-barrel drop expected by analysts in a Reuters poll.
Distillate inventories, which include diesel and jet fuel, fell by 42,000 barrels to 105.14 million barrels. Stockpiles remained well below typical levels for this time of year over the past five years.
With Middle East shipping risks, hurricane-related production cuts and tighter US inventories all supporting prices, oil markets remain highly sensitive to further developments affecting global supply.
