Oil prices rise nearly 5% as Hormuz attacks intensify supply fears
Synopsis
Oil prices climbed nearly 5% as fresh attacks on vessels in the Strait of Hormuz heightened fears of supply disruptions, while analysts said a proposed record release of strategic oil reserves may not be enough to offset losses.
Oil prices rose nearly 5% on Wednesday as new attacks on ships in the Strait of Hormuz heightened fears of supply disruptions in the Middle East. The gains came despite a proposal by the International Energy Agency to release record volumes of oil reserves to stabilise markets.
Key highlights
- Oil prices settle nearly 5% higher amid escalating supply concerns
- Brent ends at $91.98, while WTI settles at $87.25
- More vessels struck in the Strait of Hormuz, raising shipping risks
- IEA proposes record 400 million-barrel oil reserve release
- Analysts warn supply losses from the Gulf could push oil toward $150
Global oil prices climbed sharply after fresh attacks on vessels in the Strait of Hormuz raised concerns about energy supply security.
Brent crude futures rose $4.18, or 4.8%, to settle at $91.98 per barrel, while US West Texas Intermediate (WTI) gained $3.80, or 4.6%, to close at $87.25 per barrel.
Maritime security firms reported that three additional vessels were struck by projectiles in the Strait of Hormuz, bringing the total number of ships hit in the region to at least 14 since the Iran war began.
Shipping activity through the strategic waterway has slowed significantly since the United States and Israel launched strikes on Iran on February 28.
The Strait of Hormuz is one of the world’s most important energy routes, carrying around one-fifth of global oil supply.
Shipping Disruptions Shake Energy Markets
Disruptions in the Strait of Hormuz have intensified concerns about global oil supply.
With shipping activity declining and attacks on vessels increasing, traders fear that prolonged disruption could tighten global energy markets and push oil prices significantly higher.
The situation has also raised concerns about broader geopolitical risks and their impact on global energy flows.
Analysts Warn Market Turbulence May Persist
Analysts at Macquarie said the proposed release of strategic reserves may not be sufficient to counter a prolonged conflict.
“If that doesn’t sound like much, it isn’t,” analysts said, referring to the scale of the proposed supply release relative to global production.
Morgan Stanley also warned that energy market disruptions could continue even if the conflict ends quickly.
“Even a quick resolution probably implies weeks of disruption for energy markets yet,” the bank said.
IEA Considers Record Oil Reserve Release
The International Energy Agency (IEA) has proposed releasing 400 million barrels of oil reserves, the largest such release in its history.
The proposed amount is more than double the 182 million barrels released in 2022 after Russia’s invasion of Ukraine.
However, analysts estimate the volume equals about four days of global oil production and roughly 16 days of crude shipments that normally pass through the Gulf, limiting its ability to offset a prolonged supply disruption.
Infrastructure Hits Add to Supply Risks
Oil prices rose despite data from the US Energy Information Administration (EIA) showing that US crude inventories increased more than expected last week.
However, gasoline and distillate stocks, which include diesel and jet fuel, fell more than expected, signalling strong fuel demand.
Meanwhile, Abu Dhabi National Oil Company (ADNOC) shut its Ruwais refinery after a fire caused by a drone strike, adding another disruption to regional energy infrastructure.
Gulf Producers Struggle to Offset Supply Loss
Saudi Arabia, the world’s largest oil exporter, is trying to increase shipments through its Red Sea export hub at Yanbu, though the rise has not been enough to offset reduced flows through the Strait of Hormuz.
Several Gulf producers, including Iraq, Kuwait and the United Arab Emirates, have also cut output due to the disruption.
Energy consultancy Wood Mackenzie estimates the conflict is currently removing around 15 million barrels per day of oil and oil products from the Gulf supply.
Analysts warn that if the disruption continues, crude prices could climb as high as $150 per barrel.
FAQs
Q1. Why did oil prices surge nearly 5%?
Fresh attacks on ships in the Strait of Hormuz increased fears of major global oil supply disruptions.
Q2. What are the latest oil price levels?
Brent crude settled at $91.98 per barrel, while WTI closed at $87.25 per barrel.
Q3. What is the IEA planning to do?
The International Energy Agency is considering releasing 400 million barrels of strategic oil reserves.
Q4. How much oil supply is at risk?
Analysts estimate the conflict could disrupt around 15 million barrels per day of Gulf oil supply.
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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