Oil Prices Surge over Lingering Supply Risks
Oil prices surged on Thursday as lingering Middle East tensions strengthened supply concerns and risks. Brent crude traded at $82.84 per barrel, up 2.5% from the previous close of $80.76. US benchmark West Texas Intermediate (WTI) increased 2.6% to $76.53 per barrel, compared with $74.59 in the previous session.
Prices had eased late on Wednesday amidst rumours of potential talks between the US and Iran. Market worries persist, particularly over the fate of shipments through the Strait of Hormuz, a route that carries roughly one-fifth of global oil and LNG supply.
US Treasury Secretary Scott Bessent said the Washington administration would announce new measures that could directly affect global trade and energy markets.
Bessent stated that a series of measures would be implemented to ensure the continuation of oil shipments in the Persian Gulf. He emphasised that geopolitical tensions in the region would not be allowed to threaten energy corridors and noted that Washington stands ready regarding the Strait of Hormuz, a critical chokepoint for global oil flows.
Bessent also noted that the first concrete step to prevent disruptions in maritime traffic was taken yesterday. The US International Development Finance Corporation (DFC) has begun providing “reasonably priced” political risk insurance for crude oil tankers and cargo vessels operating in the Persian Gulf.
“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz as soon as possible. No matter what, the United States will ensure the free flow of energy to the world,” Trump said.
Meanwhile, international credit rating agency Fitch Ratings said that any effective closure of the Strait of Hormuz, the main driver behind recent oil price increases following attacks on Iran, would likely be temporary due to the strait’s critical economic role.
Fitch noted that such a scenario, combined with the current surplus in global oil supply, would likely limit further increases in oil prices. However, escalating tensions, including Iran’s missile attacks on Israel and continued US military actions, are sustaining upward pressure on prices by fueling supply concerns.
US commercial crude oil inventories increased by 0.8% in the week ending Feb. 27, according to data released by the Energy Information Administration (EIA) late Wednesday.
Inventories rose by about 3.5 million barrels to 439.3 million barrels. Market expectations had pointed to an increase of about 3 million barrels.
Strategic petroleum reserves, which are excluded from commercial crude stocks, remained unchanged at 415.4 million barrels, the data revealed.
Over the same period, gasoline inventories decreased by around 1.7 million barrels to 253.1 million barrels.
EIA data showed that US crude oil production fell by 6,000 barrels per day (bpd) to about 13.69 million bpd during the week ending Feb. 27.
US crude oil imports fell by 335,000 bpd to approximately 6.3 million bpd, while exports decreased by around 316,000 bpd to around 3.99 million bpd over the same period.
In the Short-Term Energy Outlook (STEO) released on Feb. 10, the EIA predicted that crude oil output in the country would average 13.6 million bpd in 2026. Dangote Sugar Falls by 10% as Refinery Earnings Plunge
