Daijiworld Media Network - Perth
Perth, Oct 8: Oil prices rose on Thursday amid concerns over supply disruptions in the Middle East following increased attacks on shipping in the Gulf and Strait of Hormuz, while a hurricane threatened offshore production in the United States.
Brent crude futures rose $2.28, or 2.28%, to $102.28 a barrel by 0427 GMT. US West Texas Intermediate (WTI) crude futures gained $1.66, or 1.88%, to $89.94.
Oil prices had settled lower on Wednesday after the International Energy Agency agreed to accelerate the release of oil stocks and prioritise diesel supplies as governments respond to high fuel prices and supply disruptions linked to the Iran conflict.
However, concerns over oil shipments through the Gulf and Strait of Hormuz have intensified. The waterway carried shipments equivalent to around 20% of global oil and fuel supplies before the conflict.
Attacks on tankers passing through the Strait of Hormuz reached their highest level last week since the conflict began. In the latest incident, a tanker north of Qatar was struck by multiple projectiles, causing casualties, according to the United Kingdom Maritime Trade Operations agency.
MST Marquee head of energy Saul Kavonic said the frequency of attacks on ships had reached its highest level since the war began and could increase further. He said constrained fuel flows, high logistics costs and the risk of further escalation were keeping oil prices elevated.
ANZ analyst Daniel Hynes said the IEA's planned oil release would likely include barrels already covered under its original 400-million-barrel release plan announced at the beginning of the Middle East conflict. He noted that strategic stock releases could temporarily increase supply but would not create additional production capacity.
Meanwhile, supply concerns were compounded by a hurricane approaching offshore production areas in the US Gulf of Mexico. Shell and Chevron said they were curtailing offshore operations as Hurricane Isaias approached.
US Gulf of Mexico oil and gas producers had shut in around 25.08% of current oil production and 16.37% of natural gas production as of Wednesday because of the storm, according to the Marine Minerals Administration.
US inventory data also supported oil prices. Crude stockpiles fell by 3.2 million barrels to 424.1 million barrels in the week ended October 2, exceeding analysts' expectations for a decline of 1.7 million barrels.
Distillate inventories, including diesel and jet fuel, declined by 42,000 barrels to 105.14 million barrels, remaining below levels typically recorded for this period over the past five years.