Oil prices have again topped $100 a barrel as widespread Iranian attacks on energy facilities in the Middle East overshadowed a vast release of government reserves.
As Donald Trump vowed to “finish the job” and press ahead with the US-Israel war on Iran, the country’s regime stepped up retaliatory strikes on economic targets across the region.
Several merchant ships were struck in and around the strait of Hormuz, one of the most important arteries in global trade. Three crew members onboard one of the ships – the Thai-registered Mayuree Naree – were “believed to be trapped”, the vessel’s owner said.
Meanwhile, Iraq halted all operations at its oil ports after an attack on two nearby tankers. Bahrain told residents to stay at home after an Iranian attack on fuel tanks in the Muharraq governorate.
Oman shifted all vessels out of its main oil export terminal at Mina Al Fahal – one of the few remaining ports from which crude can be shipped from the Middle East to the world – after drone strikes at another of its ports, Bloomberg reported, citing sources who received a notice from a port agent.
The price of Brent crude, the international benchmark, rallied by 9% to $100.29 (£74.88) a barrel on Thursday despite efforts by governments across the world to allay fears of a sustained supply crunch. It later slipped back to $98 a barrel, up by about 6%.
In an attempt to calm concerns over oil supplies, the International Energy Agency (IEA) ordered the largest release of government reserves in its history on Wednesday, when its 32 members unanimously agreed to release 400m barrels of emergency crude.
The IEA said on Thursday that the war in Iran was expected to cut the region’s oil and gas production by at least 10m barrels of oil a day.
The escalating regional conflict has damaged key oil and gas infrastructure and many producers have begun shutting down production as exports via the strait of Hormuz have come to a halt and local storage facilities fill up.
In a report, the IEA said the sharp slump in Middle East production could lead to a global oil output slump of 8m barrels a day this year – even with increased production from countries including Russia.
The fall in global oil supplies would far exceed the dent to global demand as a result of the war, according to the global energy watchdog. It has cut 1m barrels of oil a day from its global oil demand forecasts for this year because of lower refining and air travel in the Middle East.
The effect of soaring energy costs is also expected to weigh on global economic growth, which could cause demand to fall further, but the IEA said it was too soon to say how great the impact might be.
The global oil shortfall is expected to pile pressure on the market, which is already experiencing wild swings as the war unfolds.
The price of oil broke the $100 mark for the first time in four years on Monday, when it soared as much as 29% to hit a peak of $119, before falling back sharply after Trump described the war as “very complete” in a series of conflicting remarks. The oil price had been about $60 a barrel at the start of the year.
News of the record release of government oil reserves was swiftly eclipsed, however, as fresh violence across the Middle East – and signs that Tehran was deliberately targeting sites – heightened apprehension around the disruption in global energy markets.
As prices resumed their rise, Iran’s military command goaded the US. “Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised,” a spokesperson said.
The West Texas Intermediate price of US crude also climbed back towards $100 early on Thursday, rising 8.6% to $94.75 a barrel. Leading stock markets in Asia came under pressure, with Japan’s Nikkei 225 dropping 1.6%, while South Korea’s Kospi index fell 1.2%. European natural gas prices rose for a second day, up 7.7%.
Aramco, Saudi Arabia’s state-owned oil company, has warned of “catastrophic consequences” for the world’s oil markets if the strait of Hormuz remains blocked.
As part of the IEA’s move to calm the oil price shock sparked by the Iran war, the US announced plans to release 172m barrels of oil from its strategic petroleum reserve.
The US energy secretary, Chris Wright, said the release would begin next week and would take approximately 120 days to deliver.
In his statement, Wright accused Iran of having “manipulated and threatened the energy security of America and its allies”.
Trump said earlier on Wednesday that he planned to tap the US petroleum reserve. The move, he added, would “substantially reduce oil prices as we end this threat to America and this threat to the world.”
On Thursday, Goldman Sachs raised its forecast for Brent crude in the fourth quarter of 2026 to $71 a barrel, up from $66 a barrel.
Jim Reid, a market strategist at Deutsche Bank, said investors were facing the risk of a “broader stagflationary shock”.
Reuters contributed reporting
