Oil Prices Soar After Iraq Ship Attacks, IEA Release Fails to Allay Supply Concerns
Global oil prices surged after two tankers were attacked in Iraqi waters, sparking renewed concerns about shipping security and energy supplies in the Middle East. Market sentiment was more influenced by the risk of supply disruptions than the International Energy Agency's (IEA) massive oil reserve release.
Brent crude briefly rose as much as 8.2% to US$99.54 per barrel, while West Texas Intermediate (WTI) hit US$94 per barrel. Following the attacks, Iraq temporarily halted operations at its oil terminals, according to port officials' statements to local state media.
This incident highlights the threat to energy shipping lanes in the region, not just the Strait of Hormuz. Tensions in Hormuz are said to have disrupted global oil flows, given that the route typically carries about a fifth of global oil trade. This disruption has also driven up the prices of natural gas and refined products like diesel, increasing the risk of inflationary pressures.
Amid this situation, Gulf producers have also begun cutting production. Iraq was among the first to reduce output, followed by Kuwait and Saudi Arabia. This cut prompted the IEA to conduct a coordinated release of 400 million barrels of reserves, with the US planning to release 172 million barrels as part of efforts to contain price increases.
However, the market believes the additional supply from strategic reserves is insufficient to offset the potential for major disruptions in the Middle East. Global oil consumption is just over 100 million barrels per day, while supply cuts from Gulf producers are said to already be around 6% of that demand and risk increasing if the situation worsens.
Geopolitically, escalating rhetoric has diminished hopes for a swift de-escalation. Iran has conveyed through regional intermediaries that a ceasefire requires a US guarantee that there will be no further attacks, a condition Washington finds difficult to accept. President Donald Trump has declared the war will end soon, although he has also asserted that the US will persist "as long as necessary" to achieve its objectives.
In Asian trading, Brent crude for May rose 6.2% to US$98.65 per barrel at 9:32 a.m. Singapore time, while WTI crude for April rose 6.0% to US$93.51 per barrel.
The current oil price surge is primarily driven by supply and shipping security risks. Market participants will be monitoring security developments in Iraqi waters, the operational status of export terminals, and the direction of tensions in the Strait of Hormuz, which is key to global supply stability. (asd)
Source: Newsmasker.id
