Oil rises as Middle East supply concerns persist amid shipping attacks

Oil prices experienced an increase on Thursday due to concerns over Middle East supply, compounded by a rise in attacks on shipping in the Gulf and the Strait of Hormuz, reported London-based journalists on Thursday. Brent crude futures surged 1.33%, reaching $101.53 per barrel, while US West Texas Intermediate (WTI) crude futures climbed 1.26%, reaching $89.39.

Prices had decreased on Wednesday after the International Energy Agency (IEA) announced plans to release oil stocks and prioritize diesel supplies in March, aiming to address record fuel prices and supply disruptions caused by the Iran conflict. However, threats to oil shipping in the Gulf and the Strait of Hormuz, which accounted for approximately 20% of global oil and fuel prior to the war, intensified in October as the US-Israeli-Iranian conflict entered its eighth month.

The number of attacks on tankers in the Strait of Hormuz reached its highest level since the beginning of the Iran war, with a recent incident involving a tanker off the coast of Qatar resulting in casualties, according to the UK Maritime Trade Operations agency. The heightened attacks are taking place amid increased oil exports from the Gulf, albeit at higher costs and risks to vessels and crews.

Despite the attacks, producers appear willing to take the risk, as they have no alternative means to transport their oil to international markets, stated Daniel Hynes, a senior commodity strategist at bank ANZ, in a note on Thursday. Hynes also noted that the IEA's oil release would likely consist of barrels already included in the group's initial 400-million-barrel release plan at the start of the Middle East conflict, implying that it does not represent an additional draw on strategic inventories.

Ultimately, strategic stock releases can temporarily boost supply flows but do not create new production capacity, Hynes added. Meanwhile, US inventory data, the world's largest oil consumer and producer, supported prices as crude stockpiles declined by a larger-than-expected 3.2 million barrels to 424.1 million barrels in the week ending October 2, compared to a Reuters poll expectation of a 1.7 million-barrel decline.

Diesel inventories also fell slightly by 42,000 barrels to 105.14 million barrels, which is lower than levels reported for this time of year in the past five years.