NEW YORK: Oil prices settled up nearly 5 percent on Wednesday as fresh attacks on ships in the Strait of Hormuz worsened supply disruption fears, and analysts said the International Energy Agency’s proposal for a record release of oil reserves is inadequate to ease those worries.
Brent futures rose USD4.18, or 4.8 percent, to settle at USD91.98 a barrel, while US West Texas Intermediate ended the session up USD3.80, or 4.6 percent, at USD87.25 a barrel. Three more vessels have been hit by projectiles in the Strait of Hormuz, maritime security and risk firms said on Wednesday.
That brought the number of ships struck in the region to at least 14 since the Iran war began. Shipping along the narrow strait has come to a near standstill since the United States and Israel began strikes on Iran on February 28, preventing exports of around a fifth of the world’s oil supply and sending global oil prices surging to highs not seen since 2022. President Donald Trump has said the United States is prepared to escort tankers through the Strait of Hormuz when necessary.
However, sources told Reuters the US Navy has refused requests from the shipping industry for military escorts as the risk of attacks is too high for now. The IEA, meanwhile, recommended the release of 400 million barrels of oil, the largest such move in its history, to try to rein in energy prices, which are now up more than 25 percent since the war began.
The time frame for the release will be decided in due course, the IEA said. The proposed volume is more than double the 182 million barrels released in 2022 following Russia’s invasion of Ukraine, but analysts said it was ultimately insufficient to resolve supply losses from a prolonged war in the Middle East.
The proposed release is roughly equal to about four days of global production and 16 days of the volume of crude that transits through the Gulf, Macquarie analysts estimated.
“If that doesn’t sound like much, it isn’t,” the analysts said in a note.
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