Oil spikes 4%: Brent tops $104 as Gulf Hurricane shut-ins and Iran risks tighten supply

Crude oil futures jumped 4% on Thursday as supply disruptions caused by prolonged Middle East tensions, coupled with the US halt in production due to a storm in the Gulf of Mexico, added to the price rise.

The December contract for Brent crude futures jumped 4% above the $104/bbl mark, while the US contract, West Texas Intermediate, was up 3.85% near the $92/bbl level.

Attacks on tankers sailing through the waterway route- the Strait of Hormuz– hit their highest mark in a single week since the beginning of the West Asia conflict, Reuters reported, citing maritime security sources. This added to market fear of further supply disruptions.

Tropical Storm Isaias prompted Gulf of Mexico producers to shut down a large chunk of offshore production, which accounts for nearly 15% of crude imported to the US annually. As per the Marine Minerals Administration, producers halted 511,000 bpd due to the Atlantic hurricane.

“With oil prices already high, the production cuts are steep enough to affect markets, though other Gulf hurricanes have caused larger disruptions, “ ABC News quoted Jim Burkhard, global head of crude oil market research for S&P Global Energy, as saying. He added that the possibility of Isaias striking as a powerful storm near refineries will add to further market tensions.

Commenting on the rise in oil prices, Ole Hansen, head of commodity strategy at Saxo Bank, said in a social media post that crude rose following the flare-up in US-Iran tensions. He added that the White House has reportedly asked the Pentagon to prepare possible military strike plans in the Middle East.

#Commodities:Brent #crudeoil gained further ground, trading near USD 103, while WTI is back above USD 90 amid concerns the Middle East conflict could flare up again ahead of the US midterms after the White House reportedly asked the Pentagon to draw up strike options.…

These, combined with the halt of US production due to the storm in the Gulf of Mexico, added to the price rise. He noted that all of these developments combined showcase that oil markets remain far from normalisation.

“Crude continues to be shipped at exceptionally high cost, while curtailed fuel exports are keeping product markets tight. Gasoil – the key pricing benchmark for diesel, jet fuel, marine and heating fuels – has climbed back above $191 per barrel,” Hansen added.