Brent crude and WTI both jumped 5% on Thursday after a tanker was struck off Qatar and flows through the Strait of Hormuz slipped back from a brief recovery. A Gulf of Mexico hurricane cutting US production added further pressure, while reports of a possible US strike on Iran kept traders on edge.
Brent crude rose 5% to trade above $105 a barrel on Thursday morning. That put the benchmark at its highest since September 29. West Texas Intermediate, the US benchmark, climbed 5% to $92.70. The jump reverses a pullback seen in late September, when easing tensions briefly let more oil move through the Gulf.
Attacks surge as Hormuz flows slip
That recovery is now unwinding. UK Maritime Trade Operations reported nine attacks on vessels near the strait in the first week of October, after 13 over the course of September. It said a tanker was struck by multiple projectiles off Qatar on Wednesday evening, with casualties reported — only the second such attack in the Gulf since the war began.
As a result, average weekly flows through the Strait of Hormuz, which climbed to nearly 90% of prewar levels in late September, have fallen back to about 11 million barrels a day, according to trade consultancy Kpler. Preliminary data showed just 4 million barrels transited the strait on Tuesday.
Hurricane adds to the supply squeeze
Supply pressure is building outside the Gulf region too. Shell and Chevron said they were curtailing offshore operations as a hurricane approached the US Gulf of Mexico, the world's biggest oil producer. Gulf of Mexico producers had shut in about 25.08% of oil production and 16.37% of natural gas production as of Wednesday, according to the Marine Minerals Administration.
US inventory data added to the pressure, too: crude stockpiles fell by a higher-than-expected amount, while diesel inventories also declined, according to EIA figures cited by Reuters.
Traders brace for further escalation
Adding to the uncertainty, The Atlantic reported that US President Donald Trump was considering a plan to strike Iran before the November midterm elections. Separately, Axios reported that Washington was preparing to resume major combat operations against Iran, though Reuters said it could not independently verify that report.
IG Chief Market Analyst Chris Beauchamp said: "Investors certainly don't seem to be taking any chances."
The rally has reached far beyond oil. Ten-year gilt yields jumped 0.07 percentage points to 5.52%, their highest since 2007, as the price surge deepened pressure on indebted governments' finances.
Sources: Financial Times, Investing.com
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