Written by Shariq Khan
NEW YORK, March 11 (Reuters) – Oil prices gained more than 4% on Wednesday as fresh attacks on ships in the Strait of Hormuz fueled fears of supply disruptions, and analysts said the International Energy Agency’s proposal for a record release of oil reserves was not enough to ease those fears.
Brent futures rose $3.88, or 4.4%, to $91.68 a barrel at 1:30 pm EDT (1730 GMT). US West Texas Intermediate traded $3.38 higher, or 4.1%, at $86.83 a barrel.
Three more ships were hit by explosives in the Strait of Hormuz, maritime security and risk companies said on Wednesday. That brought the number of shipwrecks in the region to at least 14 since the start of the Iran conflict.
Shipping through the narrow strait has come to a near standstill since the US and Israel launched strikes on Iran on February 28, blocking the export of nearly a fifth of the world’s oil supply and sending global oil prices to their highest level since 2022.
President Donald Trump has also said that the US is willing to escort tankers to the Strait of Hormuz if necessary. However, sources told Reuters The US Navy has rejected requests from the shipbuilding industry to patrol the military as the risk of attack is too high at the moment.
The IEA, on the other hand, recommended the release of 400 million barrels of oil, which is the largest step in the history of the organization, to try to stabilize the prices of electricity which have now increased by more than 25% since the start of the US-Israel war with Iran. The timing of the release will be determined later, the IEA said.
The proposed output is more than double the 182 million barrels released in 2022 following Russia’s invasion of Ukraine, but analysts say it is ultimately not enough to offset supply losses due to the protracted war in the Middle East.
The proposed release is roughly equivalent to about four days of global production and 16 days of pollution volume passing through the Gulf, Macquarie analysts estimate.
“If that doesn’t sound like a lot, it isn’t,” analysts said in the paper.
Oil prices also shrugged off a US government report that showed crude oil stocks in the oil-producing nation rose more than expected last week. US gasoline and distillate fuel stocks, including diesel and jet fuel, fell more than expected, the report said. [EIA/S]
SURGICAL CONCERNS REMAIN
Abu Dhabi’s regional oil giant, ADNOC, has shut down its Ruwais refinery due to a fire in the facility following a drone strike, according to a source, marking the latest disruption to energy infrastructure due to the US-Israel war in Iran.
Saudi Arabia, the world’s largest oil producer, appears to be increasing imports through the Red Sea, although it is still well below the levels needed to offset the decline in flows from the Strait of Hormuz, shipping data showed.
The kingdom is relying on the Red Sea port of Yanbu to help it boost exports to avoid production cuts as neighbors Iraq, Kuwait and the United Arab Emirates have already cut output.
Energy consultant Wood Mackenzie said the war is currently reducing the Gulf oil and oil products market by 15 million barrels per day, which could push crude prices up to $150 per barrel.
“Even a quick decision would probably mean weeks of disruption in energy markets,” Morgan Stanley said in a note.
(Reporting by Shariq Khan and Ahmad Ghaddar; Additional reporting by Katya Golubkova in Tokyo and Trixie Yapp in Singapore; Editing by Nick Zieminski Editing by Sonali Paul, Jacqueline Wong, Shri Navaratnam, Louise Heavens and David Gregorio)
