Oil prices surged in early trading Thursday, briefly reclaiming the $100-per-barrel mark as new signs of disruptions in global energy supply emerged amid the ongoing conflict involving the U.S., Israel and Iran.
Although crude later pared some of its gains following renewed discussion about emergency releases from strategic reserves by major economies, prices remained firmly higher overall.
Brent crude futures climbed 6.6% to $98.06 per barrel by 05:07 ET (09:07 GMT), while U.S. West Texas Intermediate futures rose 6.1% to $92.61 per barrel.
Earlier in the session, Brent had spiked to as high as $101.59 per barrel.
Tanker attacks near Iraq and Oman port evacuation push oil higher
Media reports indicated that two international oil tankers had been attacked in the northern Persian Gulf close to Iraq and Kuwait. Footage circulating online showed the vessels engulfed in flames, with Iraqi media attributing the strike to Iran.
Farhan al-Fartousi, director of Iraq’s General Company for Ports, told The Wall Street Journal that one sailor had died and that Iraqi rescue crews were evacuating sailors from the two vessels, which were still burning. He added that Iraq had closed all of its oil ports and that fuel had spilled into the sea.
Separately, Bloomberg reported that Oman had cleared all vessels from a major oil export terminal at Mina Al Fahal as a precautionary step following a series of attacks on ships in nearby waters.
Concerns over supply disruptions intensified further after Reuters reported that China had immediately halted all exports of refined fuels in March in order to avoid a potential domestic shortage linked to the conflict with Iran.
The developments suggest that disruptions tied to the Iran conflict are now spreading beyond the Strait of Hormuz, as the war entered its thirteenth consecutive day on Thursday.
Attacks on tankers and the shutdown of ports have heightened fears of supply interruptions tied to the conflict, particularly after Iran warned that no crude shipments would pass through the Strait of Hormuz, a vital global shipping corridor.
The country was seen blocking the route earlier this week — a passage that carries roughly 20% of the world’s oil supply.
ANZ analysts cautioned in a note that markets may still be underestimating how long the conflict could last and the scale of the disruptions it may cause.
“Once a conflict extends beyond the initial shock phase, oil markets tend to shift from pricing uncertainty to pricing endurance,” ANZ analysts said.
“At that point, the key question is no longer whether supply
is disrupted, but how long producers can physically sustain output under deteriorating operating conditions.”
Emergency reserve releases temper oil rally
Even so, oil prices remained below their weekly highs as several countries moved to offset potential supply shocks.
Reports suggested that the International Energy Agency is preparing a record release of 400 million barrels from strategic petroleum reserves this week.
U.S. President Donald Trump also said on Wednesday that the United States would release 172 million barrels from the Strategic Petroleum Reserve to help cushion the energy shock stemming from the Iran conflict.
Despite these measures, the conflict involving Iran has shown few signs of easing, even as U.S. officials continued to say the war could soon be nearing its end.
Earlier this week, oil prices had surged to almost $120 per barrel.
Separately, data released on Wednesday showed that U.S. crude inventories rose by 3.8 million barrels in the previous week, a larger increase than analysts had expected.
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