Oil prices rose on Thursday as persistent supply concerns from the Middle East collided with escalating shipping attacks in the Gulf and the Strait of Hormuz, alongside hurricane-driven production cuts in the United States, according to Reuters.
Oil Prices Rise as Hurricane Isaias Shuts Production
- Brent crude futures rose $1.33, or 1.33%, to $101.53 a barrel by 0116 GMT, and later climbed to $102.28 a barrel, according to reports by Reuters and AOL.
- US West Texas Intermediate (WTI) crude futures gained $1.11, or 1.26%, reaching $89.39, later extending gains to $91.99 a barrel.
- US Gulf of Mexico producers shut in roughly 25.08% of current oil production and 16.37% of natural gas production as Hurricane Isaias approached offshore platforms.
Strait of Hormuz Shipping Attacks Drive Premiums Higher
Threats to oil shipping in the Gulf and the Strait of Hormuz increased sharply as the conflict entered its eighth month, pushing prices higher. Before the war, the Strait of Hormuz carried shipments equal to about 20% of global oil and fuel. Attacks on tankers sailing through the passage hit their highest weekly level since the conflict began, even as Gulf producers increased export volumes.
Daniel Hynes, senior commodity strategist at ANZ, noted that while producers previously responded to such attacks with reduced shipments, current market conditions compel them to accept the high risks of vessel damage due to a lack of alternative export routes. Hynes added that recent actions by the International Energy Agency to release oil stocks largely draw from pre-existing plans rather than creating new production capacity.
US Crude Stockpiles Fall More than Expected
Official data released on Wednesday reinforced the tighter supply outlook. The Energy Information Administration reported that US crude stockpiles fell by 3.2 million barrels to 424.1 million barrels for the week ended October 2, exceeding analysts’ expectations for a 1.7 million-barrel decline. Distillate fuel inventories, which encompass diesel and jet fuel, dropped by 42,000 barrels to 105.14 million barrels.
Simultaneously, weather-related disruptions added upward pressure on pricing. Operators including Shell plc (NYSE: SHEL) and Chevron Corporation (NYSE: CVX) curtailed offshore operations in the Gulf of Mexico as Hurricane Isaias approached production infrastructure, according to AOL.
| Crude Benchmark | Price Movement | Reported Valuation |
|---|---|---|
| Brent Crude Futures | +4.13% | $102.28 / barrel |
| US WTI Crude Futures | +4.20% | $91.99 / barrel |
| US Crude Stockpiles | -3.2 million barrels | 424.1 million barrels total |
Geopolitical Tensions and Shipping Attacks Keep Prices High
Market analysts monitored unfolding geopolitical developments alongside physical supply metrics. IG Chief Market Analyst Chris Beauchamp pointed to reports that Washington was preparing major combat operations against Iran, keeping prices elevated above the $100 threshold as investors priced in potential supply shocks.
Saul Kavonic, head of energy at MST Marquee, highlighted that the frequency of regional attacks on shipping vessels remains at a peak, keeping logistics costs extreme and product flows constrained. Concurrently, reports indicated that Syria was considering military assistance options for Saudi Arabia regarding the escalating conflict with the Iran-backed Houthis in Yemen, adding another layer of complexity to regional supply routes.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
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