Oil Prices Surge Above $104 as Middle East Shipping Crisis Deepens

LONDON — Oil prices jumped sharply Thursday as attacks on commercial shipping in the Gulf and Strait of Hormuz intensified concerns about global energy supplies.

Brent crude futures rose about 4.5% to $104.75 a barrel, while U.S. West Texas Intermediate crude increased about 4.5% to $92.28, according to Reuters. Both benchmarks reached their highest levels in more than a week.

The latest price increase reflects a combination of geopolitical and supply concerns. Shipping attacks in the Gulf have increased, while uncertainty surrounding Iran and the security of the Strait of Hormuz has made traders increasingly concerned about the reliability of energy shipments.

The Strait is particularly important because it handled shipments equivalent to approximately 20% of global oil and fuel flows before the current conflict. Any prolonged reduction in traffic could have consequences well beyond the Middle East.

The latest attacks have also increased the cost and difficulty of moving energy products. Shipping companies are reassessing routes, while producers are looking for alternative ways to move oil and fuel to international markets.

At the same time, the United States is facing an additional supply concern because Hurricane Isaias is disrupting offshore oil and gas production in the Gulf of Mexico. Reuters reported that more than 25% of current U.S. Gulf oil production and more than 16% of natural-gas production had been shut in because of the storm as of Wednesday.

Major energy companies, including Shell and Chevron, have curtailed offshore operations as the hurricane approaches.

The International Energy Agency has also moved to accelerate the release of emergency oil stocks and prioritize diesel supplies as governments respond to high fuel prices and supply disruptions.

U.S. inventory data provided another source of upward pressure on prices. Crude inventories declined more than analysts had expected, while diesel inventories also fell.

The combination of Middle East tensions, shipping disruptions and reduced U.S. offshore production has created an unusually uncertain energy market.

For consumers, sustained increases in crude prices could eventually affect gasoline, diesel, airline and transportation costs. The extent of any impact will depend on how long shipping disruptions continue and whether alternative supply routes can compensate for reduced flows through the Gulf. Markets remain particularly sensitive to developments involving Iran and the Strait of Hormuz.