Oil Prices Rise Above $100 Despite Record Reserve Release

Oil prices climbed sharply on Thursday as escalating tensions in the Middle East overshadowed efforts to stabilise global energy markets.

Brent crude rose more than 9% to $101.59 per barrel before easing slightly to around $99.44. The surge came despite a major decision by the International Energy Agency (IEA) to release a record amount of oil from strategic reserves.

Investors remain worried that attacks on shipping and continued threats to the Strait of Hormuz could prolong the disruption to global energy supplies.

Attacks on Ships Intensify Market Fears

Oil markets reacted strongly after three additional cargo vessels were struck in the Gulf, raising fears that commercial shipping could face further attacks.

In his first public remarks since becoming Iran’s supreme leader, Mojtaba Khamenei said the country should continue to use the “lever of blocking the Strait of Hormuz”.

The waterway remains effectively closed as shipping companies hesitate to send vessels through the region due to security risks.

An Islamic Revolutionary Guard Corps spokesperson warned that Iran would target any vessel linked to the United States, Israel or their allies.

“You will not be able to artificially lower the price of oil,” the spokesperson said.

“Expect oil at $200 per barrel.”

Why the Strait of Hormuz Matters

The Strait of Hormuz is one of the most important energy routes in the world.

About 20% of global oil and large volumes of liquefied natural gas normally pass through the narrow channel between Iran and Oman.

Countries across the Gulf region operate major oil fields and refineries that depend on the passage to export crude oil, jet fuel and diesel.

Since the conflict began, tanker traffic has dropped sharply as shipping companies avoid the area.

That disruption has pushed energy markets into extreme volatility.

Record Oil Reserve Release Fails to Calm Markets

The International Energy Agency announced on Wednesday that its 32 member countries had agreed to release 400 million barrels of oil from emergency reserves.

The move represents the largest coordinated release of strategic oil stockpiles in history.

Governments hope the additional supply will offset shortages caused by the war and help stabilise global fuel prices.

However, markets reacted only briefly to the announcement.

Prices dipped initially but quickly rose again after Iran’s threats and new attacks on vessels heightened fears of prolonged disruption.

Analysts Say Supply Loss Is Much Larger

Energy experts say the emergency release may not be enough to counter the scale of supply disruption.

Bill Farren-Price, senior research fellow at the Oxford Institute for Energy Studies, said traders had already anticipated the reserve release.

“The market had priced it in,” he told the BBC.

He added that the measure only offers temporary relief.

“It is a sticking plaster on a much bigger problem,” he said.

The conflict has removed around 20 million barrels per day of supply from Gulf markets, he explained.

Global oil consumption exceeds 100 million barrels per day, highlighting the scale of the disruption.

Stock Markets Slide as Energy Costs Rise

Rising oil prices have also shaken financial markets.

Major US stock indexes opened lower on Thursday. The Dow Jones Industrial Average and S&P 500 each dropped about 1.3%, while the Nasdaq fell 1.7%.

European markets also declined.

London’s FTSE 100 fell 0.7%, while Germany’s DAX, France’s CAC 40, and Spain’s IBEX all dropped.

In Asia, Japan’s Nikkei index closed down about 1%.

Investors worry that higher energy costs could slow economic growth and fuel inflation worldwide.

Oil Market Faces Historic Supply Shock

The International Energy Agency described the conflict as creating “the largest supply disruption in the history of the global oil market.”

Major Gulf producers — including Iraq, Qatar, Kuwait, the United Arab Emirates and Saudi Arabia — have cut production by at least 10 million barrels per day.

The agency warned that restoring production may take weeks or even months.

Oil fields require workers, equipment and infrastructure that have been disrupted by the conflict.

Higher Energy Costs Could Push Inflation Up

Economists warn that sustained increases in oil and gas prices could have wider economic consequences.

Energy costs influence transportation, manufacturing and household bills.

Higher fuel prices could push inflation higher and complicate central bank plans to lower interest rates.

Before the conflict began, many analysts expected the Bank of England to cut interest rates this year.

But the recent spike in oil prices has changed those expectations.

Maike Currie, head of personal finance at PensionBee, said markets had been expecting two rate cuts.

“Now we are expecting none,” she said.

“There is even the possibility of rate rises.”

Impact Already Felt Across Asia

The disruption to energy supplies has already begun to affect countries across Asia.

Several nations in the region depend heavily on oil shipments from the Middle East.

Long queues formed at petrol stations in the Philippines, Thailand and Vietnam as drivers rushed to fill their tanks.

Authorities in Thailand have asked many government employees to work from home to conserve energy.

Officials have also discouraged non-essential overseas travel.

The Philippines has introduced a four-day work week for government employees in an effort to reduce fuel consumption.

Markets Expect Continued Volatility

Global oil markets have remained extremely volatile since the United States and Israel launched air strikes against Iran on 28 February.

Before the conflict began, Brent crude traded at around $73 per barrel.

Earlier this week it briefly approached $120 per barrel, its highest level in several years.

Analysts say prices will likely remain unstable while the conflict continues and shipping through the Strait of Hormuz remains uncertain.

For now, traders appear convinced that the disruption to energy supplies may last longer than governments initially hoped.