Oil prices surged more than 4% on Thursday, driven by renewed tensions in the Middle East and significant energy supply disruptions ahead of Hurricane Isaias approaching the U.S. Gulf Coast.
Brent crude futures climbed $4.08, or 4.1%, to settle at $104.28 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude gained $3.21, or 3.6%, closing at $91.49 per barrel.
Both crude oil benchmarks briefly advanced more than $5 during the session. Brent also reached its highest level since September 29 as investors assessed the possibility of additional U.S. military strikes against Iran and the impact of the approaching hurricane.
However, prices retreated from their intraday highs after President Donald Trump signaled progress in diplomatic discussions with Tehran.
U.S.-Iran Tensions Keep Oil Markets on Edge
Geopolitical uncertainty remained a major driver of the oil price rally, with investors closely monitoring developments in the ongoing Middle East conflict.
President Trump said Washington was holding productive discussions with Iran and pledged that the United States would not launch military strikes against the country before the November 3 midterm elections.
The comments temporarily eased concerns about an immediate escalation, reducing some of the upward pressure on crude oil prices.
Meanwhile, Iran indicated that diplomatic negotiations were continuing.
According to Iran’s Tasnim news agency, Foreign Minister Abbas Araqchi said Tehran was reviewing Washington’s response to an Iranian proposal aimed at reopening the Strait of Hormuz within seven days.
Araqchi suggested that Iran would provide its response within the coming days.
Despite these diplomatic developments, uncertainty surrounding the conflict continues to influence global energy markets.
U.S. Announces New Sanctions Against Iranian Oil
The United States also introduced additional sanctions targeting Iran’s energy sector on Thursday.
According to the U.S. Treasury Department, the latest measures target individuals, commercial networks, and 17 vessels involved in transporting Iranian crude oil, petroleum products, and petrochemicals.
The sanctions are intended to increase economic pressure on Tehran as tensions between the two countries persist.
Additional restrictions on Iranian energy shipments could further complicate global oil trade and increase concerns about available supplies.
Meanwhile, regional governments are examining additional measures to protect critical energy infrastructure.
France and Saudi Arabia Consider Oil Infrastructure Protection
France and Saudi Arabia are evaluating several security arrangements involving French military assets to help safeguard the Yanbu oil terminal.
French Armed Forces Chief of Staff General Fabien Mandon confirmed that multiple options were under consideration.
The discussions reflect growing concerns over the security of strategically important energy facilities amid the continuing regional conflict.
Separately, Syria was reportedly considering military assistance to Saudi Arabia in its confrontation with the Iran-backed Houthi movement in Yemen.
According to U.S. and Syrian military officials familiar with the discussions, potential assistance could involve defensive support or the deployment of forces to assist Saudi-backed Yemeni troops.
However, the reported options remained under consideration, with no final decision confirmed.
Strait of Hormuz Disruptions Threaten Global Oil Supply
The Strait of Hormuz remains a critical concern for international oil markets as attacks on commercial shipping intensify.
Before the conflict, oil and fuel shipments passing through the strait represented approximately 20% of global supply.
However, security threats in the Gulf have increased during October as the Middle East conflict enters its eighth month.
Reports indicate that attacks against tankers traveling through the Strait of Hormuz reached their highest frequency since the war began.
The escalation occurred despite efforts by Gulf oil producers to increase exports and stabilize energy supplies.
Saul Kavonic, Head of Energy at MST Marquee, warned that Iranian attacks on commercial vessels had reached their most frequent levels since the beginning of the conflict.
He also suggested that shipping disruptions could intensify further.
These developments have increased uncertainty over the reliability of Middle Eastern energy exports, supporting higher crude oil prices.
International Energy Agency Moves to Ease Supply Pressure
Governments and international energy organizations are also taking steps to address the growing pressure on global fuel supplies.
On Wednesday, oil prices declined after the International Energy Agency (IEA) agreed to accelerate the release of emergency oil reserves.
The agency also prioritized diesel supplies as governments attempted to manage record fuel prices and disruptions caused by the conflict.
Releasing strategic petroleum reserves can temporarily increase available supply and help reduce shortages.
However, continued attacks on shipping routes and uncertainty surrounding Middle Eastern production could limit the effectiveness of these measures.
As a result, energy traders remain focused on whether emergency supply releases can offset the impact of ongoing geopolitical disruptions.
Hurricane Isaias Forces Major Gulf of Mexico Oil Shutdowns
Alongside geopolitical tensions, Hurricane Isaias has emerged as another major threat to U.S. energy production.
The storm is approaching offshore production facilities in the Gulf of Mexico and is expected to make landfall on Friday.
Energy companies have already suspended significant portions of their operations as a precaution against potentially damaging weather conditions.
According to the U.S. Marine Minerals Administration, Gulf of Mexico producers had shut down approximately 1.3 million barrels per day of oil production, representing 62.9% of current output as of Thursday.
The extensive shutdowns highlight the potential impact of severe weather on U.S. crude oil supplies.
Shell, Chevron and BP Suspend Offshore Operations
Several major energy companies have implemented precautionary measures ahead of the storm.
Shell and Chevron announced reductions in offshore operations on Wednesday as Hurricane Isaias approached production facilities.
Meanwhile, BP evacuated personnel and suspended production at its Na Kika and Thunder Horse offshore platforms.
These measures aim to protect workers and infrastructure from dangerous weather conditions.
However, the resulting production losses have added further pressure to an oil market already facing significant geopolitical supply risks.
The duration of the shutdowns will depend on the storm’s severity and the condition of offshore facilities once operations can safely resume.
Oil Price Outlook: Supply Risks Remain Elevated
The latest 4% rally in oil prices highlights the combined impact of geopolitical uncertainty and weather-related production disruptions.
In the Middle East, investors continue to assess the possibility of renewed military escalation, additional sanctions, and further threats to shipping through the Strait of Hormuz.
At the same time, Hurricane Isaias has forced major U.S. energy producers to suspend offshore operations, temporarily reducing available crude oil supplies.
Although diplomatic progress between Washington and Tehran could help ease market concerns, significant uncertainty remains.
Looking ahead, traders will closely monitor developments in U.S.-Iran negotiations, the restoration of Gulf of Mexico production, and potential additional measures by international energy agencies.
For now, Brent crude remains above $100 per barrel, while supply disruptions and heightened geopolitical risks continue to shape the outlook for global energy markets.
