Oil prices rose more than 3% on Thursday, extending the rally as the escalating US-Israeli war with Iran raises fears of a prolonged disruption to vital oil and gas supplies in the Middle East.
Brent crude rose $2.65, or 3.26%, to $83.99 a barrel by 0520 GMT, a fifth session of gains. U.S. West Texas Intermediate crude rose $2.76, or 3.70%, to $77.42.
ANZ analysts said in a note on Thursday that crude oil markets remained on edge due to continued supply threats following attacks in the Middle East and concerns about supply flows through the Strait of Hormuz.
Iran fired a wave of missiles at Israel on Thursday morning, sending millions of people into bomb shelters as the conflict entered its sixth day and just hours after efforts to stop US air strikes in Washington were halted.
On Wednesday, a US submarine sank an Iranian warship near Sri Lanka, killing at least 80 people, and NATO air defenses destroyed an Iranian ballistic missile fired toward Turkey.
Iranian forces have attacked oil tankers in or near the Strait of Hormuz. According to United Kingdom Maritime Trade Operations, explosions have been reported near a tanker near Kuwait.
Tensions rose as the powerful son of Iran’s slain supreme leader emerged as the frontrunner to succeed him, showing Tehran was not going to bow under pressure, five days after the US and Israel launched a military campaign that has killed hundreds and sent global markets into turmoil.
Iraq, the second-biggest crude producer in the Organization of the Petroleum Exporting Countries, has cut production by about 1.5 million barrels a day due to a lack of storage and export routes, officials told Reuters. Qatar, the largest liquefied natural gas producer in the Gulf, on Wednesday declared force majeure on gas exports. Sources say it may take at least a month to return to normal production volume.
Two oil traders said they expect oil prices to rise as a quick resolution to the conflict appears unlikely.
At least 200 ships, including oil and liquefied natural gas tankers as well as cargo ships, are still anchored in the open waters off the coast of the Gulf’s major producers including Iraq, Saudi Arabia and Qatar, according to a Reuters estimate based on ship-tracking data from the MarineTraffic platform.
Shipping data showed hundreds of other ships failed to reach ports outside Hormuz. This waterway is an important route for about one-fifth of the world’s oil and LNG supply.
The Chinese government has asked companies to stop signing new contracts to export refined fuel and try to cancel already scheduled shipments, industry and trade sources said on Thursday.
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