Oil prices soared Thursday, briefly trading above $100, and stock markets extended losses as fresh attacks against Gulf energy targets offset the release of crude reserves by major economies.
The International Energy Agency (IEA) said the Middle East conflict “is creating the largest supply disruption in the history of the global oil market”, a day after member countries agreed to release 400 million barrels of oil from their reserves — the largest such move ever.
Despite the decision, concerns over tightening energy supplies persisted, particularly as the Strait of Hormuz — a key route for about one-fifth of global crude shipments — has effectively been shut due to Iranian retaliatory strikes on vessels and neighbouring Gulf states.
An attack on two oil tankers off the coast of Iraq reportedly left at least one crew member dead, while another cargo vessel caught fire after being struck by shrapnel.
In its latest market update, the IEA said global crude output has dropped by at least eight million barrels per day, with another two million barrels of petroleum products affected — representing roughly 7.5 percent of daily global production.
Brent North Sea crude, the international benchmark, climbed as high as $101.59 per barrel on Thursday before easing slightly and then rising again.
Prices gained fresh momentum after US President Donald Trump said preventing Iran from acquiring nuclear weapons was a greater priority than stabilising oil prices.
At around $100 per barrel, Brent crude has risen by approximately 38 percent since the conflict began 13 days earlier when the United States and Israel launched airstrikes on Iran.
“Energy markets have been rattled by news of Iranian attacks on shipping in the Persian Gulf, along with missiles aimed at countries across the region,” said David Morrison, an analyst at Trade Nation.
“The US’s inability to reopen the Strait of Hormuz and provide security for the shipping passing through, suggests that there are limits to their dominance,” he added.
The strategic oil reserves released by the IEA are estimated to equal about 20 days of supply that would normally pass through the Strait of Hormuz, which remains effectively closed because of the ongoing attacks.
Morrison said if the decision to release oil from reserves was meant to stabilise prices, “then they failed dismally”.
The spike in oil prices has already begun affecting the aviation industry.
New Zealand’s national airline announced plans to cancel about 1,100 flights over the next two months, while Hong Kong-based Cathay Pacific introduced new jet fuel surcharges for most routes. Air France-KLM also said it would raise ticket prices.
Kathleen Brooks, research director at trading group XTB, warned that sustained high oil prices could have serious economic consequences.
“The longer the oil price remains elevated, the more damaging and long lasting the inflation shock will be for the global economy,” she said.
Meanwhile, global stock markets reacted negatively. Wall Street’s major indices opened lower, with the Dow Jones falling by more than one percent.
European markets also traded in negative territory during afternoon sessions, while most Asian markets ended the day with losses.
The US dollar strengthened against several major currencies, reflecting increased demand for safer assets amid market uncertainty.
Victoria Scholar, head of investment at Interactive Investor, said:
“The dollar has strengthened, driven by safe-haven demand, fears of inflation, and higher-for-longer interest rate expectations.”