Oil prices surged again on Thursday, extending the recent rally as the conflict in the Middle East entered its sixth day with no clear signs of easing, raising fears of disruptions to supply from one of the world’s most important crude-producing regions.
At 03:35 ET (08:35 GMT), Brent crude futures for May delivery rose 2.6% to $83.54 a barrel, while U.S. West Texas Intermediate (WTI) crude futures advanced 3.1% to $76.96 a barrel.
Both benchmarks are now heading for a fifth straight day of gains, with Brent trading just below its highest level since July 2024.
Middle East conflict, Strait of Hormuz risks remain in focus
The Middle East conflict, which erupted over the weekend when the United States and Israel carried out coordinated strikes against Iran, continues to escalate with little indication of a near-term resolution. Tensions intensified after the U.S. sank an Iranian warship near Sri Lanka in international waters, highlighting the growing geographic reach of the confrontation.
On Wednesday, the U.S. Senate rejected a proposal — largely divided along party lines — that aimed to halt the air campaign and require congressional approval for further military action.
At the same time, Tehran dismissed reports claiming that Iran’s Ministry of Intelligence had contacted Washington to discuss a potential end to the conflict, describing the report as “pure falsehood” and accusing Western media of spreading misinformation. The denial dampened hopes for a diplomatic breakthrough in the near term.
Concerns over oil supply have grown after Iran effectively shut down the Strait of Hormuz, one of the world’s most critical oil shipping routes through which roughly one-fifth of global crude flows.
The disruption is already affecting regional output. Reports indicated that Iraq declared force majeure on certain crude exports as shipments through the Strait of Hormuz were heavily disrupted.
Iraq, the second-largest oil producer in the Organization of the Petroleum Exporting Countries, has cut output by nearly 1.5 million barrels per day due to limited storage capacity and the lack of viable export routes, officials told Reuters.
“Successfully blocking the Strait of Hormuz would leave significant upside to the market, potentially with Brent hitting $140/bbl, with supply losses unable to be offset,” said analysts at ING in a note. “However, a full and prolonged blockage of the strait would likely be unsuccessful, with any attempts to do so leading to a rapid response. Partial disruptions, which could include seizing or attacking tankers, would likely mean Brent spikes towards $100/bbl initially but settles in a largely $80-90/bbl range.”
U.S. crude inventories rise more than forecast – API
Weekly data from the American Petroleum Institute (API) showed that U.S. crude inventories increased by around 5.6 million barrels in the week ended Feb. 28, well above expectations for a build of roughly 2.2 million barrels, though still significantly lower than the previous week’s rise of 11.4 million barrels.
Traders are now awaiting the official inventory figures from the U.S. Energy Information Administration (EIA), due later on Thursday, for confirmation of the increase.
Leave a Reply