Oil prices surged by more than 3% on Thursday, extending their recent rally as the escalating US-Israeli conflict with Iran heightened concerns about prolonged disruptions to critical oil and gas supplies from the Middle East.
Brent crude climbed $2.65, or 3.26%, to $83.99 per barrel by 05:20 GMT, marking its fifth consecutive session of gains. Meanwhile, US West Texas Intermediate (WTI) crude rose $2.76, or 3.70%, to $77.42 per barrel.
Oil markets remain on edge as risks to supply persist following the latest developments in the Middle East, with particular concern focused on the flow of energy shipments through the Strait of Hormuz, analysts at ANZ said in a note on Thursday.
The tensions escalated further after Iran launched a wave of missiles at Israel early Thursday, as the conflict entered its sixth day, just hours after attempts to halt the US air campaign were blocked in Washington.
On Wednesday, a US submarine sank an Iranian warship off the coast of Sri Lanka, reportedly killing at least 80 people, while NATO air defence systems intercepted an Iranian ballistic missile headed toward Turkiye.
Iranian forces have also reportedly targeted oil tankers in or near the Strait of Hormuz. According to the United Kingdom Maritime Trade Operations, explosions were reported near a tanker off the coast of Kuwait.
Iraq, the second-largest crude producer within the Organisation of the Petroleum Exporting Countries (Opec), has reduced output by nearly 1.5 million barrels per day due to limited storage capacity and the absence of a viable export route, officials told Reuters.
Meanwhile, Qatar — the Gulf’s largest producer of liquefied natural gas (LNG) — declared force majeure on gas exports on Wednesday. Sources indicated that it could take at least a month for production to return to normal levels.
Two oil traders said they expect oil prices to remain bullish, as a quick resolution to the conflict appears unlikely.
Shipping activity has also been disrupted. According to Reuters estimates based on ship-tracking data from the MarineTraffic platform, at least 200 vessels — including oil tankers, LNG carriers, and cargo ships — are currently anchored in open waters near major Gulf producers such as Iraq, Saudi Arabia, and Qatar.
Additionally, hundreds of other ships remain stranded outside the Strait of Hormuz, unable to reach regional ports, shipping data showed. The waterway is a crucial route for nearly one-fifth of the world’s oil and LNG supply.
Amid the uncertainty, China’s government has reportedly asked companies to halt the signing of new contracts for refined fuel exports and to attempt cancelling shipments that have already been committed, according to industry and trade sources.
