Key Takeaways
- Oil prices jumped 6 percent, reaching over $100 a barrel.
- Attacks on shipping in the region have increased, raising concerns about supply disruptions.
- Iran and the US have escalated tensions, with Iran threatening further attacks.
Oil prices surged by 6 percent on Thursday, with both Brent and West Texas Intermediate (WTI) crude futures trading above $100 a barrel. Brent crude futures reached their highest level since mid-May, rising $5.87, or 5.8 percent, to $107.08 a barrel by 1720 GMT. WTI crude futures also topped $100 a barrel for the first time since May, rising $5.57, or 5.8 percent, to $101.62.
The spike in oil prices comes amid heightened concerns over supply disruptions. Attacks on shipping in the region have intensified, with the Houthi group seizing control of Yemen’s port of Mocha on Thursday. This poses a further threat to Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz due to ongoing tanker attacks.
Simon-Peter Massabni, head of business development at XS.com, stated, 'The threat is no longer confined to a single choke point, but now includes the potential for disruptions to ripple across regional export routes, oil production sites and other energy infrastructure.'
Iran has escalated its response to attacks, with the Islamic Revolutionary Guard Corps threatening to escalate its response to any further attacks. Iran claimed it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US had hit five Iranian oil tankers.
US President Donald Trump warned that the US may hit Iran’s Pickaxe Mountain, located near its heavily damaged Natanz uranium enrichment facility, and suggested the war could last beyond the November midterm elections.
Analysts are concerned about the durability of the rally, with China, the world’s largest crude importer, playing a key role. China has stepped up purchases in recent weeks, boosting physical crude markets. If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher.
The Energy Information Administration reported that US crude oil inventories fell by 391,000 barrels to 424.1 million barrels last week, as refining activity continues to show strength. Analysts had expected a 1.55-million-barrel draw.
OPEC lowered its forecast for world oil demand growth in 2026, adding to concerns about the sustainability of the current price rally. The organization’s reduced demand forecast could further impact oil prices and market stability.
With prospects for a definitive resolution to the Iran conflict dimmed, crude oil markets are settling into a prolonged new normal where disruption risk is persistent, not episodic, according to a new analysis by S&P Global Energy.
The threat is no longer confined to a single choke point, but now includes the potential for disruptions to ripple across regional export routes, oil production sites and other energy infrastructure.
Simon-Peter Massabni, Head of business development at XS.com
