Oil prices appreciated by nearly 5 per cent on Wednesday as fresh attacks on ships in the Strait of Hormuz worsened supply disruption fears.
Brent futures gained $4.18 or 4.8 per cent to settle at $91.98 a barrel, while the US West Texas Intermediate (WTI) futures increased by $3.80 or 4.6 per cent to $87.25 a barrel.
Three more vessels have been hit by projectiles in the Strait of Hormuz, maritime security and risk firms said on Wednesday. That brought the number of ships struck in the region to at least 14 since the Iran war began.
Iran warned that no oil shipments will be allowed to pass through the Strait of Hormuz until the attacks stop, placing the world’s most critical oil trade point at the centre of the escalating conflict. The narrow waterway between Iran and Oman normally handles roughly 20 per cent of global oil supply and a large share of liquified natural gas (LNG) trade, making any sustained disruption a major threat to global energy markets.
Tanker movements through the region have already begun slowing as insurers and ship operators reassess the risks of transiting the corridor.
The country, which is one of the largest producers in the Organisation of the Petroleum Exporting Countries, on Wednesday said that crude could surge to $200 per barrel if the war involving the US and Israel continues to destabilise the Middle East’s energy corridors.
Crude briefly surged to around three digits earlier this week before retreating toward the $90 range after US President Donald Trump suggested the conflict might end soon. However, renewed attacks on shipping and infrastructure have quickly revived fears of supply disruptions.
Meanwhile, the International Energy Agency (IEA) recommended the release of 400 million barrels of oil, the largest such move in its history, to try to rein in energy prices, which are now up more than 25 per cent since the war began. The energy watchdog said the time frame for the release will be decided in due course.
The proposed volume is more than double the 182 million barrels released in 2022 following Russia’s invasion of Ukraine. Analysts, however, said it was ultimately insufficient to resolve supply losses from a prolonged war in the Middle East.
Member countries collectively hold roughly 1.2 billion barrels of strategic reserves, which can be tapped during supply emergencies.
Crude oil inventories in the US increased by 3.8 million barrels during the week ending March 6, according to data from the US Energy Information Administration (EIA). The EIA’s data release follows figures from the American Petroleum Institute (API) that were released a day earlier, which reported that crude oil inventories fell by 1.7 million barrels in the period.