Brent crude futures surged past $112 a barrel on Thursday, reaching levels not seen since May, as escalating attacks on shipping in the Strait of Hormuz intensified concerns about global oil supply disruptions. The benchmark climbed to $112.50 in early trading before settling near $111.95, while West Texas Intermediate advanced roughly 2.4% to hover around $99.50.
Rising Tensions in the Strait of Hormuz
The latest price jump followed reports of multiple vessels catching fire in the strategic waterway overnight. Iran's navy said it struck four vessels involved in what it described as illegal oil transfers in the northern Gulf, and reported that three additional ships caught fire after colliding with mines in the Strait. The Iranian military also warned of a broader response targeting regional bases used by the United States, raising the specter of a wider conflict that could further pressure oil supplies.
The Strait of Hormuz remains the focal point of immediate supply concerns, with attacks on vessels raising questions about the security of shipments passing through this critical chokepoint. Traders are closely monitoring any developments that could disrupt the flow of crude from major Gulf producers.
Saudi Arabia Faces New Security Threats
Saudi Arabia is confronting fresh security challenges even as overall oil exports from Gulf producers have recovered to prewar levels. A day after two people were killed in an attack at an airport in Dammam, Saudi Aramco reportedly instructed staff to evacuate its headquarters in Dhahran and work remotely. The headquarters had been targeted by Yemen's Houthi militant group earlier this month.
These incidents have added to uncertainty surrounding Saudi energy infrastructure, with attacks on regional facilities and shipping routes continuing to influence market sentiment. PVM Oil analyst Tamas Varga told Reuters that diplomatic efforts to reduce tensions were not convincing enough to ease supply concerns. "Efforts to mitigate tensions, both in Ukraine and the Middle East, lack credibility … reports of Middle East crude oil exports exceeding pre-conflict levels are more than countered by attacks on ships in the Strait of Hormuz and the Houthi strikes on Saudi Arabia and on its oil infrastructure," he said. "No de-escalation is anticipated until the US midterm elections, which should keep oil prices elevated."
US Inventory Data Adds Support
Fresh US inventory data provided additional support to the oil market. The Energy Information Administration reported that commercial crude stockpiles fell by 3.06 million barrels to 412.5 million barrels last week, exceeding forecasts for a smaller decline. Gasoline inventories also dropped by approximately three million barrels, while distillate stocks unexpectedly increased by 1.68 million barrels.
The larger-than-expected drawdown reinforced concerns about near-term supply availability, particularly as the market grapples with geopolitical risks and potential disruptions to shipping routes.
Political and Economic Implications
Oil prices have become a politically sensitive issue in the United States ahead of the midterm elections. Rising diesel costs and persistent inflation concerns could create additional pressure on the administration, especially if energy prices remain elevated. President Donald Trump has stated that his administration will not attack Iran before the elections, but traders remain wary of the unfolding situation.
With shipping security, Saudi infrastructure, and the prospect of a wider conflict all in focus, oil prices remain highly sensitive to developments across the region. The market is likely to stay volatile as investors weigh the potential for further disruptions against any signs of diplomatic progress.
This article is for informational purposes only and does not constitute financial advice.
