Oil markets are experiencing a new rally, with Brent crude prices temporarily surging past $105 per barrel — just two days after briefly dipping below the $100 mark. The sharp reversal is linked to renewed fears over a potential US-Iran military conflict, with reports indicating that American forces have been ordered to prepare for a possible large-scale strike. At the same time, attacks on tankers in the Persian Gulf and the Strait of Hormuz are adding fresh uncertainty over the security of energy supply routes, while production disruptions in the Gulf of Mexico are temporarily curtailing US output. Together, these developments are intensifying market pressures, despite efforts to release strategic reserves in a bid to stabilize prices.
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Oil markets rattled by Iran fears and Strait of Hormuz attacks
The deteriorating security of maritime shipping lanes across the Middle East is one of the most significant factors driving prices higher. A series of attacks on vessels in the Persian Gulf and the Strait of Hormuz have deepened concerns over the continuity of energy flows, even as oil-producing nations in the region attempt to ramp up exports. According to information that has been made public, attacks on tankers transiting the Strait reached their highest frequency since the beginning of the war with Iran last week. A missile strike on a tanker north of Qatar, which resulted in casualties, further heightened uncertainty over maritime transportation in the region.
Compounding the already tense situation are reports that Washington is weighing new military strikes against Iran, with markets closely monitoring the potential for further escalation. UBS analyst Giovanni Staunovo noted that the renewed tensions and ship attacks — extending beyond the Strait of Hormuz — are casting doubt on whether elevated oil flows through the region can be sustained. MST Marquee’s head of energy, Saul Kavonic, warned that the frequency of Iranian attacks is at its highest point since the start of the war, adding that constrained product flows, rising shipping costs, and the risk of fresh escalation continue to keep prices elevated.
Hurricane Isaias disrupts US production in the Gulf of Mexico
Additional supply pressures are emerging from the Gulf of Mexico, where Hurricane Isaias is threatening offshore oil and natural gas infrastructure. Energy majors Shell and Chevron announced a scale-back of operations in the area, implementing precautionary measures to protect personnel and facilities. These decisions have already led to a significant temporary reduction in output at a time when international markets are already grappling with heightened supply risks stemming from the Middle East.
According to data from the relevant US agency, as of Wednesday, 25.08% of oil production and 16.37% of natural gas production in the Gulf of Mexico had been shut in. Oil production outages exceeded 510,000 barrels per day — roughly a quarter of the region’s total output. This shortfall is temporarily reducing available US supply and adds to concerns over Persian Gulf oil shipments, further amplifying volatility in international prices.
Strategic reserves and the IEA’s intervention
The latest US inventory data is also contributing to the upward price trend, with crude oil stockpiles falling by more than analysts had expected, while diesel inventories posted a modest decline as well. This reinforces the picture of a tight supply environment, despite initiatives taken to bolster market supply. The previous day, prices had pulled back following an International Energy Agency agreement to accelerate the release of oil reserves, with priority given to diesel, in an effort to ease fuel market pressures.
However, this intervention does not appear to have fully reassured markets. According to UBS, details surrounding the proposed release of 100 million barrels from G7 strategic reserves proved disappointing, as the volumes appear to form part of the already-announced 400-million-barrel release program rather than representing any additional supply boost. As a result, despite efforts to rein in prices, threats to Middle East shipping, the prospect of new military action against Iran, and temporary US production losses continue to drive oil market movements on the international stage.
