Isaias strengthens to become first Atlantic hurricane of 2026 season

Oil prices surged above $104 on Thursday due to growing concerns about global oil supplies. The main worry is that attacks on oil tankers in the Strait of Hormuz are reducing the number of ships using this crucial waterway. This has raised fears about whether enough oil can reach global markets. The price of Brent crude, the global benchmark, jumped 4.3% to $104.48 a barrel, pushing oil above the $100-a-barrel level again.

The number of tankers crossing the Strait of Hormuz has decreased significantly, with only seven vessels passing through on Tuesday, a sharp drop from the usual average of seven days. This reduction is alarming because the Strait of Hormuz is a major route for global oil shipments. The biggest reason for fewer tankers is a rise in attacks, with 10 incidents reported between September 28 and October 4, a record weekly number.

These attacks, even as more crude oil leaves the Gulf, indicate that the issue is not just a lack of oil production but also concerns over vessel safety and cargo security. Hurricane Isaias adds another layer of supply risk for the US, as the storm moves towards the Gulf Coast, home to a significant portion of America's oil and refining industry.

Oil companies, including Shell and Chevron, have taken steps to mitigate the impact, with plans to reduce production and evacuate nonessential workers, adding to supply concerns. The oil price rise has also impacted other energy markets, with European natural gas and diesel prices climbing as oil prices climbed, increasing worries about higher energy costs.

This energy shock is also affecting European bond markets, with a renewed selloff and higher European natural gas prices nearing their recent peak. The International Energy Agency (IEA) has decided not to release additional oil from emergency reserves despite offering to accelerate the remaining 100 million barrels. US fuel prices have not risen as sharply as global oil prices, staying around $4.36 a gallon for regular gasoline and $6.28 a gallon for diesel, according to AAA.

The main concern is the ongoing uncertainty about future oil supplies, with the potential for tighter markets due to the combined effects of the Strait of Hormuz attacks and Hurricane Isaias.