Oil Prices Hold Above $103 as Iran Tensions Disrupt Supply
Oil prices moved higher on Thursday, remaining above the $103 per barrel level as uncertainty around potential talks between the United States and Iran persisted. Ongoing disruptions to shipping in the Strait of Hormuz also supported prices following recent attacks on vessels.
Brent crude, the global benchmark, rose 1.9% to $103.82 per barrel, while U.S. West Texas Intermediate (WTI) gained 2.0% to $94.83 per barrel in early trading.
Strait of Hormuz Attacks Fuel Supply Concerns
Crude prices climbed back above $100 per barrel after Iran targeted multiple ships in the Strait of Hormuz, seizing two vessels. The move was seen as an attempt by Tehran to reinforce its control over the key shipping corridor.
Iran described the attacks as retaliation for ongoing U.S. restrictions on its ports, further escalating tensions in the region.
U.S.-Iran Talks Remain at a Standstill
Despite the extension of a temporary ceasefire by Donald Trump, prospects for renewed negotiations remain uncertain. Reports indicate that U.S. forces have continued monitoring Iranian vessels across broader Asian waters.
Both sides remain entrenched in their positions. Iran has ruled out further negotiations while U.S. naval restrictions remain in place, while Washington insists on the full reopening of the Strait of Hormuz before progressing toward a broader agreement.
Market Repricing and Rising Risk Premium
Analysts at ING noted that markets are beginning to reassess expectations. As hopes for a resolution fade, supply disruptions are becoming a more dominant driver of price action, potentially supporting further upside in oil prices.
The Strait of Hormuz, a narrow passage off Iran’s southern coast, handles roughly 20% of global oil supply. Any prolonged disruption could have significant consequences for global energy markets, particularly in Asia and the Middle East.
U.S. Oil Exports Hit Record Levels
Meanwhile, U.S. oil and petroleum exports surged to a record 12.88 million barrels per day last week, driven by increased demand from Europe and Asia amid Middle East supply disruptions.
Domestic fuel demand also remained strong. Gasoline inventories dropped by 4.6 million barrels, far exceeding expectations, while distillate stockpiles declined by 3.4 million barrels.
Inventory Trends Show Mixed Signals
Despite strong demand for refined products, total U.S. crude inventories rose by 1.9 million barrels, contrary to expectations for a draw. The data reflects a complex supply-demand dynamic, with robust consumption offset by increased production and stockpiling.
