Oil prices surge despite strategic reserve release
Oil prices climbed back above $100 a barrel and stock markets fell after three more cargo vessels were hit in the Gulf.
News of further strikes on shipping helped to push Brent crude up by more than nine per cent yesterday, before the price eased a little to $98.42.
The jump came despite the International Energy Agency (IEA) saying on Wednesday that it will release a record 400 million barrels of oil in an attempt to curb the economic impact of the US-Israel war with Iran.
Investors are increasingly concerned that the global economy will take longer to recover if strikes to shipping and energy infrastructure in and around the Strait of Hormuz continue.
The strait is a key waterway for energy shipments but is effectively closed over concerns that vessels could be attacked.
As well as transporting oil, liquefied natural gas is shipped through the passage and surrounding countries operate refineries which produce jet fuel and diesel.
An Islamic Revolutionary Guard Corps spokesperson said on Wednesday that any vessel linked to the US, Israel or their allies would be targeted.
Stock market indexes in Europe fell yesterday.
London’s FTSE 100 slid 0.4 per cent while Germany’s Dax, France’s Cac and Spain Ibex all dropped. In Japan, the Nikkei share index closed down one per cent.
Yesterday, the IEA said the war in the Middle East was “creating the largest supply disruption in the history of the global oil market”.
It said that Iraq, Qatar, Kuwait, the United Arab Emirates and Saudi Arabia have cut total oil production by at least 10 million barrels per day.
It added that “production will take weeks and, in some cases, months to return to pre-crisis levels depending on the degree of field complexity and the timing for workers, equipment and resources to return to the region”.
This week, the IEA announced that all 32 countries who are members of the agency had agreed to release a record of amount of oil to tackle supply shortages and higher prices.
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