Brent crude rallied back toward $100 a barrel after two tankers were attacked in Iraqi waters, underscoring the broader risks to energy assets across the Middle East and overshadowing a record oil release from the IEA.
Brent jumped as much as 8.2% to $99.54 a barrel and West Texas Intermediate surged above $94. The nation halted operations at its oil terminals after the ships were targeted, the director of General Company for Ports Iraq told state-run Iraqi News agency. The attacks highlight the threat to shipping all over the region, not just in the Strait of Hormuz, which remains effectively closed.
Iraq was one of the first Persian Gulf producers to start reducing output after the near-closure of Hormuz, followed by Kuwait and Saudi Arabia. The cuts have forced the International Energy Agency to act with a co-ordinated release of 400 million barrels — a historic drawdown that is significantly higher than the volume that followed Russia’s invasion of Ukraine in 2022.
The US announced it plans to release 172 million barrels as part of the effort by nations around the world to cool prices. Global consumption of crude is slightly more than 100 million barrels a day and Gulf producers have had to reduce roughly 6% of that so far. Cuts in the Middle East could climb further.
“This is what I was concerned about with the IEA release — completely ignored, and now prices are higher,” said Darrell Fletcher, managing director for commodities at Bannockburn Capital Markets. “It may have sent the wrong signal. What do they know that we don’t?”
The near-closure of Hormuz, through which a fifth of global oil typically flows, has driven up prices of crude, natural gas and products such as diesel, raising concerns about an inflation crisis.
“The only thing that’s really going to bring oil prices back down is if we really see the Strait of Hormuz reopen,” Neil Beveridge, direct of research at Sanford C. Bernstein & Co., said in an interview on Bloomberg Television. The flow rates from strategic reserves are “nothing compared with the 20 million barrels” a day of disruption from the Hormuz closure, he added.
Oil rose on Wednesday on escalating rhetoric. Iran told regional intermediaries that any ceasefire would require the US to guarantee that neither it nor Israel would strike the country in the future. Washington is unlikely to accept those terms, further dimming expectations that the war will end soon.
In a speech on Wednesday in the state of Kentucky, President Donald Trump repeated that the war would end soon, though he suggested the US would stay as long as it takes to finish its objectives. “We don’t want to leave early, right?” he told the crowd.
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