Oil prices climbed sharply on Thursday as escalating attacks on commercial vessels in the Middle East and an approaching hurricane in the US Gulf Coast raised fresh concerns about global crude supply disruptions.
The rally came despite efforts by the International Energy Agency (IEA) to release additional strategic oil reserves. Meanwhile, an unexpected decline in US crude inventories provided further support for energy markets.
By 00:30 ET (04:30 GMT), Brent crude futures for December delivery surged 2.1% to $102.34 per barrel. West Texas Intermediate (WTI) crude futures for November delivery gained 1.8% to $89.87 per barrel.
The gains reflected growing uncertainty over shipping security in the Strait of Hormuz and the potential impact of severe weather on American oil production.
Strait of Hormuz Shipping Falls to Two-Month Low Amid Iranian Attacks
Tensions in the Strait of Hormuz intensified as Iranian attacks on commercial tankers disrupted shipping activity through one of the world’s most important energy transportation routes.
According to Reuters, citing shipping analytics firm Kpler, vessel movements through the waterway declined to their lowest level in more than two months.
Iran reportedly increased its attacks on shipping vessels over the previous week. Tehran also reiterated that the Strait of Hormuz remained closed amid its prolonged confrontation with the United States.
The latest developments reversed some of the improvement in maritime traffic recorded during September, when shipping activity briefly approached levels seen before the conflict.
On Wednesday evening, the UK Maritime authorities reported that a tanker traveling north of Qatar had been struck by multiple projectiles. Casualties were also reported following the incident.
The number of tanker attacks reportedly reached its highest weekly level since the beginning of the US-Iran conflict.
These developments have renewed concerns that continued instability could interrupt oil shipments from major Middle Eastern producers and drive global energy prices higher.
Pentagon Prepares for Possible New Military Strikes Against Iran
Additional geopolitical uncertainty emerged following reports that Washington was preparing for the possibility of renewed military operations against Iran.
Axios reported late Wednesday that the Pentagon had instructed US Central Command to complete preparations for another potential round of major combat operations.
However, President Donald Trump had not made a final decision regarding whether or when additional military strikes would take place.
Any renewed confrontation between American and Iranian forces could increase the risk of further disruptions to regional oil production and transportation.
The Strait of Hormuz remains particularly vulnerable because a substantial share of global oil shipments normally passes through the narrow waterway.
Beyond the Persian Gulf, instability in the Red Sea and Saudi Arabia has added to concerns about energy infrastructure and shipping security.
Hostilities involving Saudi Arabia and Yemen’s Iran-backed Houthi movement continued during the week, with reports indicating that Houthi forces had attacked an oil refinery in Riyadh.
The combination of these developments has increased the geopolitical risk premium in crude oil markets.
Hurricane Isaias Threatens US Gulf Coast Oil Production
Oil prices received additional support from growing expectations of major weather-related supply disruptions in the Gulf of Mexico.
Hurricane Isaias, which developed from a tropical storm, was forecast to strengthen further as it approached the northern US Gulf Coast.
The US National Weather Service warned that the system could bring intense rainfall, powerful winds and dangerous coastal conditions before making landfall over the weekend.
The approaching storm has prompted several major oil and gas companies to take precautionary measures across their offshore operations.
Energy producers have reportedly begun evacuating non-essential personnel from platforms and facilities exposed to the storm’s projected path.
Major companies facing potential operational disruptions include BP, Chevron and Shell, all of which maintain significant oil and gas operations in the Gulf of Mexico.
These precautions could reduce short-term production capacity and tighten supply conditions in an already sensitive global energy market.
According to a production model cited by Reuters, the storm could potentially result in the loss of as much as 11.2 million barrels of oil output across the Gulf during its passage.
However, the eventual impact will depend on the hurricane’s strength, trajectory and the duration of any offshore shutdowns.
Unexpected Decline in US Crude Inventories Supports Oil Prices
Fresh inventory data also contributed to the upward momentum in crude oil prices.
Figures released on Wednesday showed that US crude oil stockpiles declined by 3.2 million barrels during the week ending October 2.
The drawdown surprised analysts, who had expected an increase in inventories.
A larger-than-anticipated reduction in crude stocks can indicate tighter supply conditions or stronger demand, potentially supporting oil prices.
The inventory report added to existing concerns about the availability of global oil supplies as Middle Eastern shipping disruptions and severe weather threatened production and transportation.
As a result, traders faced multiple supply-related risks at the same time, strengthening bullish sentiment in the energy market.
IEA Strategic Oil Reserve Release Fails to Halt Crude Rally
Despite the increase in supply concerns, the International Energy Agency continued efforts to ease pressure on global oil markets through strategic petroleum reserve releases.
On Wednesday, the IEA called for the rapid completion of a previously announced plan to release 400 million barrels of emergency oil stocks.
According to the agency, accelerating the remaining stages of the program could introduce approximately 100 million additional barrels into the market.
The announcement initially prompted oil prices to give back some of their earlier gains as investors assessed the potential impact of increased supply.
However, uncertainty remained over whether the proposal represented an acceleration of existing commitments or could lead to further releases beyond the original plan.
The prospect of additional emergency supplies was not enough to offset concerns about disruptions in the Middle East and the US Gulf Coast.
Consequently, crude oil prices resumed their upward momentum as traders continued to focus on immediate supply risks.
Oil Price Outlook: Geopolitical Risks and Supply Disruptions Remain Key
The near-term outlook for oil prices will likely depend on developments in the Strait of Hormuz, the path of Hurricane Isaias and the ability of major producers to maintain stable output.
Further attacks on commercial shipping or renewed military operations involving the United States and Iran could create additional uncertainty around Middle Eastern energy exports.
Meanwhile, prolonged production shutdowns in the Gulf of Mexico may tighten US crude supplies, particularly if the hurricane causes significant damage to offshore infrastructure.
On the other hand, faster releases from strategic petroleum reserves or improvements in regional shipping conditions could help ease supply pressures.
Investors will also monitor upcoming US inventory reports for signs of changes in crude demand and available supply.
For now, Brent crude’s move above $102 per barrel highlights the growing importance of geopolitical and weather-related risks in global energy markets.
With several potential supply disruptions unfolding simultaneously, oil prices could remain volatile as traders assess the possibility of further shortages and their implications for inflation and the global economy.
