Oil jumps as Middle East supply concerns persist amid shipping attacks
LONDON: Oil prices rose more than five per cent on Thursday on persistent worries about supply from the Middle East amid an increase in attacks on shipping in the Gulf and the Strait of Hormuz, while the US cut output as a hurricane menaced offshore production.
Oil prices surged over five percent on Thursday, driven by concerns over Middle Eastern supply amid a rise in attacks on shipping in the Gulf and the Strait of Hormuz, while the United States reduced output due to a hurricane threatening offshore production. Brent crude futures jumped $5, or 4.99 percent, to $105.20 a barrel, reaching their highest level since September 29, while US West Texas Intermediate (WTI) crude increased $4.47, or 5.06 percent, to $92.75, their highest since October 2.
IG Chief Market Analyst Chris Beauchamp cited the impending US storm and reports of Washington preparing to resume major combat operations against Iran as factors keeping prices above $100 a barrel, though the validity of the Axios report could not be independently confirmed. Syria was reportedly considering providing military assistance to its ally Saudi Arabia for its ongoing conflict with Iran-backed Houthis in Yemen, with options ranging from defensive aid to offensive deployments.
Despite a price drop on Wednesday following the International Energy Agency's decision to accelerate oil stock releases and prioritize diesel supplies, heightened threats to oil shipping in the Gulf and the Strait of Hormuz, which carries approximately 20 percent of global oil and fuel before the war, have boosted prices. Iranian attacks on tankers in the strait have reached their highest level since the war began and are expected to intensify, according to Saul Kavonic, head of energy at MST Marquee.
Supply curtailments due to a hurricane moving towards offshore production areas in the US, the world's largest oil producer, have also contributed to elevated prices, with Shell and Chevron curtailing offshore operations in the Gulf as Hurricane Isaias approached. US Gulf of Mexico oil and gas producers shut in 25.08 percent of current oil production and 16.37 percent of natural gas production as of Wednesday, while crude inventories fell more than expected and diesel inventories declined slightly.
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