Oil prices rose sharply on Thursday as renewed attacks on commercial shipping in the Middle East and the threat of hurricane-related production disruptions along the US Gulf Coast increased concerns about global crude supplies.
Brent crude futures gained 3.9% to $104.07 a barrel by 04:17 ET (08:17 GMT), while US West Texas Intermediate (WTI) crude futures for November delivery advanced 3.7% to $91.53 a barrel.
The increases followed reports of intensified Iranian attacks on oil tankers in the Strait of Hormuz, a major shipping route for international energy supplies.
According to Reuters, citing data from shipping analytics company Kpler, vessel traffic through the waterway fell to its lowest level in more than two months as security concerns disrupted commercial shipping activity.
Iran has reportedly increased attacks on vessels operating in the strait over the past week, while Tehran has reiterated that the shipping route remains closed amid its continuing confrontation with the United States.
The latest escalation followed a temporary recovery in maritime traffic during September, when vessel movements through Hormuz briefly returned to levels recorded before the conflict.
On Wednesday, the United Kingdom Maritime Trade Operations agency reported that a tanker had been struck by multiple projectiles north of Qatar, resulting in reported casualties.
Attacks on tankers reportedly reached their highest weekly level since the beginning of the US-Iran conflict, renewing concerns about the security of oil shipments through the region.
Media reports also indicated that the Pentagon had instructed US Central Command to prepare for the possible resumption of major military operations against Iran.
However, President Donald Trump had not made a final decision on the timing of any additional strikes.
Further military escalation could disrupt oil exports from the Middle East, particularly if restrictions on shipping through the Strait of Hormuz persist.
Red Sea Security and Saudi Oil Infrastructure Remain Under Pressure
Shipping routes through the Red Sea and oil exports from Saudi Arabia have also remained a source of concern for energy markets.
Hostilities involving Saudi Arabia and Yemen’s Iran-backed Houthi movement continued during the week, with reports indicating that Houthi forces had attacked a refinery in Riyadh.
The developments have added to uncertainty surrounding regional energy infrastructure and maritime transportation.
Continued attacks on shipping and oil facilities could increase transportation costs, complicate delivery schedules and place further pressure on international crude prices.
Hurricane Isaias Raises Concerns About US Gulf Oil Production
Alongside geopolitical developments, oil markets were assessing the potential impact of Hurricane Isaias on production facilities along the US Gulf Coast.
The US National Weather Service warned that the storm was expected to strengthen rapidly and reach the northern Gulf Coast by the weekend, bringing heavy rainfall and hurricane-force winds.
Reports early on Thursday indicated that Isaias had already intensified into a hurricane.
Several major oil and gas companies reportedly began evacuating non-essential personnel from offshore installations as a precaution against deteriorating weather conditions.
BP (LSE:BP.), Chevron (NYSE:CVX) and Shell (LSE:SHEL) were identified among the companies with significant exposure to potential production interruptions in the region.
A forecasting model cited by Reuters estimated that as much as 11.2 million barrels of oil production could be lost across the Gulf of Mexico during the storm.
The prospect of reduced US output has added to upward pressure on crude prices at a time when Middle Eastern supply routes are already facing heightened security risks.
US Crude Inventories Fall as IEA Considers Strategic Reserve Releases
Oil prices also received support from US inventory figures released on Wednesday.
The data showed that US crude oil inventories declined by 3.2 million barrels during the week ended 2 October, contrary to market expectations for an increase.
The unexpected reduction suggested tighter near-term supply conditions in the US market.
However, crude prices surrendered some of their gains on Wednesday following comments from the International Energy Agency concerning previously announced strategic oil stock releases.
The IEA said that completing the planned release of 400 million barrels of oil reserves as quickly as possible would bring approximately 100 million barrels of additional supply to the market.
It remained unclear whether the proposal involved further releases beyond those already announced.
Higher Energy Prices Increase Inflation and Interest Rate Concerns
The renewed rise in crude prices has also raised concerns about the potential effects on inflation and monetary policy.
Higher oil prices can increase transportation, manufacturing and household energy costs, potentially adding to inflationary pressures across major economies.
Persistently elevated energy costs could complicate efforts by central banks to stabilise inflation and influence decisions about future interest rate increases.
Analysts at Deutsche Bank indicated that there was little evidence of a meaningful reduction in inflationary pressure linked to energy prices.
The combination of geopolitical tensions, potential US production losses and declining crude inventories has reinforced uncertainty surrounding global oil supplies and the outlook for energy prices.