Oil posted its biggest gain in a month on Thursday as escalating Iranian tanker attacks collided with Hurricane Isaias shutting down US Gulf production. Brent settled above $104 a barrel and WTI above $91, though both benchmarks pared gains after President Trump said Washington would not strike Iran before the November 3 midterm election.
Oil jumped Thursday as escalating Iranian attacks on tankers collided with a hurricane shutting down US Gulf output, driving crude to its biggest gain in a month. Brent crude climbed 4.1% to settle at $104.28 a barrel, while WTI rose 3.6% to settle at $91.49 a barrel. Both benchmarks pared early gains after Trump said the US would hold off attacking Iran before the midterm vote.
Middle East risk drives the rally
At their peak, both contracts were up more than $5 apiece, with Brent near $106 and WTI around $93. Brent also touched its highest level since September 29. Prices retreated after Trump posted that Washington was having productive talks with Iran and would not attack the country before the November 3 midterm elections, which pulled Brent back toward $101 at the session low before it recovered.
The Strait of Hormuz remains the focal point. Iran's foreign minister said Tehran was reviewing a US proposal to reopen the strait within seven days, with a reply due within days. The US Treasury separately imposed sanctions on individuals, networks and 17 vessels shipping Iranian crude. Iran's Fars news agency also reported mine explosions involving tankers in the southern strait, a claim that has not been independently confirmed.
Hurricane Isaias cuts Gulf output
Hurricane Isaias is bearing down on US offshore platforms ahead of an expected landfall Friday. Producers have shut in roughly 1.3 million barrels per day, close to two-thirds of current Gulf of Mexico output. BP removed all personnel and halted production at its Na Kika and Thunder Horse platforms, while Shell and Chevron curtailed offshore operations.
Freight costs climb alongside crude
The rally caps a year of gains: crude has rallied more than 70% this year with the Iran war curtailing exports and damaging infrastructure, launched by the US and Israel in February. Shipping costs are climbing too — moving oil from the Middle East to China cost $1.4 million a day on Wednesday, the most on record. One very large crude carrier was offered this week to sail from the US Gulf to Japan at a potential record fee of $82 million, or more than $40 a barrel.
Higher fuel prices are also feeding into broader inflation worries, with a quarter-point Federal Reserve hike fully priced in for December. Fawad Razaqzada, a market analyst at Forex.com, said "the long-term direction of oil prices will remain tilted to the upside."
Traders are now watching Tehran's reply on Hormuz, confirmation or denial of the Fars report, and how long Gulf of Mexico shut-ins last once Isaias makes landfall.
Sources: Investinglive RSS Breaking News Feed, Rigzone.com: Latest News Headlines
Trading involves risk.
Risk Disclaimer
