Key Highlights
- Brent crude surged 2.6% reaching $83.54 per barrel; WTI jumped 3.1% to $76.96 during Thursday trading
- Strait of Hormuz experiences effective closure by Iran — vessel traffic plummeted more than 95%
- Iraq announces force majeure declaration, slashing approximately 1.5 million barrels daily from production
- Market experts caution Brent could surge to $140/barrel under sustained blockade; $100 under partial disruption
- Beijing instructs refineries to freeze fuel shipments abroad; Tokyo considers tapping emergency oil stockpiles
Global oil markets witnessed their strongest performance since July 2024 on Thursday as the Middle Eastern conflict entered its sixth consecutive day with no resolution in sight.
Brent crude futures posted gains of 2.6%, settling at $83.54 per barrel. Meanwhile, West Texas Intermediate advanced 3.1% to reach $76.96. The rally marks five consecutive sessions of upward momentum for both benchmark contracts.
Hostilities erupted over the weekend following joint military operations by the United States and Israel targeting Iranian positions. Subsequently, U.S. naval forces destroyed an Iranian warship operating in international waters near Sri Lanka.
In a Wednesday vote, the U.S. Senate rejected along predominantly partisan lines a proposal requiring Congressional authorization for ongoing aerial operations.
Tehran firmly dismissed claims suggesting Iran’s Intelligence Ministry initiated diplomatic channels with Washington. Iranian officials characterized such reports as “complete fabrication.”
Critical Shipping Channel Under Siege
The Strait of Hormuz represents the epicenter of this escalating situation. International Energy Agency figures indicate approximately 20 million barrels of oil and petroleum products traverse this waterway daily during 2025.
Vessel monitoring information from Bloomberg reveals transit activity through the strait has collapsed by over 95%. The overwhelming majority of shipping operators are now circumventing this critical passage entirely.
Baghdad issued force majeure notices affecting certain crude shipments as disruptions intensified. Iraqi authorities confirmed to Reuters that production has been reduced by nearly 1.5 million barrels daily.
As OPEC’s second-largest crude producer, Iraq’s supply curtailment represents a primary catalyst behind the current market rally.
Despite an Iranian military official’s televised statement that Tehran does “not believe in closing” the strategic waterway, virtually no shipping companies are willing to risk passage through it.
U.S. officials have floated proposals including insurance coverage guarantees and potential naval convoy protection for commercial vessels. However, Marsh, the world’s premier insurance brokerage firm, estimates such arrangements could require weeks to implement.
One petroleum tanker, identified as the Sonangol Namibe, sustained damage during an assault in the northern Persian Gulf. While water escaped from a ballast compartment, no crude oil leaked from the vessel.
Asian Nations Take Emergency Measures
Beijing issued directives to major state-controlled refineries halting diesel and gasoline export operations. Chinese authorities are focusing on securing domestic fuel supplies as the disruption constrains global availability.
Tokyo formally requested governmental authorization to access strategic petroleum reserves. A leading Indian refining operation simultaneously notified customers of suspended product export commitments.
ING’s analytical team projects a complete strait closure scenario could propel Brent toward $140 per barrel. Under a partial disruption scenario involving vessel attacks, prices could spike near $100 before stabilizing within an $80–$90 trading band.
According to American Petroleum Institute data, U.S. crude inventories expanded by 5.6 million barrels during the week concluding February 28. This figure exceeded analyst projections of a 2.2 million barrel increase.
The U.S. Energy Information Administration’s official storage report was scheduled for release later Thursday.
