By: Economy Middle east

Oil prices jumped more than 3 percent on Thursday, extending recent gains as the escalating U.S.-Israeli conflict with Iran raised concerns about prolonged disruptions to key Middle East oil and gas supplies.

As of 5:47 GMT, Brent crude rose $3.01, or 3.70 percent, to $84.41 per barrel, marking a fifth consecutive session of gains. Meanwhile, U.S. West Texas Intermediate crude increased $3.05, or 4.09 percent, to $77.71.

Strait of Hormuz disruptions push oil prices higher

As energy prices surge, oil markets remained on edge as supply risks persisted following the Middle East attacks, with particular concern focused on the flow of shipments through the Strait of Hormuz. Iran launched a wave of missiles toward Israel early on Thursday, sending millions of residents into bomb shelters as the conflict entered its sixth day, just hours after attempts in Washington to halt the U.S. air assault were blocked.

On Wednesday, a U.S. submarine sank an Iranian warship off Sri Lanka, killing at least 80 people, while NATO air defence systems intercepted and destroyed an Iranian ballistic missile fired toward Turkey. Iranian forces have also targeted oil tankers in or near the Strait of Hormuz.

“Trade out of the Persian Gulf through the Strait of Hormuz lies at the heart of this conflict, with implications for the world economy, particularly regarding the flow of oil & gas from Middle Eastern producers to consumers in Asia and Europe. Trade has largely ground to a halt for precautionary reasons,” said Julius Baer analysts in a note.

The escalation came as the influential son of Iran’s supreme leader emerged as a leading contender to succeed him, signaling that Tehran is unlikely to yield to pressure. The development follows a U.S. and Israeli military campaign launched five days earlier that has left hundreds dead and impacted global markets.

U.S. crude stockpiles rise as supply concerns persist

Iraq, the second-largest crude producer in the Organization of the Petroleum Exporting Countries, has cut output by nearly 1.5 million barrels per day due to limited storage capacity and the absence of an export route, officials said. Meanwhile, Qatar, the Gulf’s largest liquefied natural gas producer, declared force majeure on gas exports on Wednesday.

“Late last week, oil prices decisively broke through the top of their $55 – $66.50 range, a band they had traded within for the past seven months. This was followed by a significant gap higher yesterday – a second clear bullish signal in just two trading days,” said Tony Sycamore, Market Analyst, IG.

Provided crude oil can hold above the key support zone of $67 – $69, Sycamore said, and with the Middle East conflict showing no signs of quick resolution, the rally could extend. “We see scope for prices to push towards the June high of $78.40, and potentially even the January 2025 high at $80.77,” he added.

“However, should crude oil lose that $67 – $69 support band – likely on any signs of de-escalation – we would expect to see prices revert back towards the $61 area, the middle of its former range,” he said.

U.S. inventory data offered a somewhat bearish signal. Weekly figures from the American Petroleum Institute showed that U.S. crude stockpiles increased by about 5.6 million barrels in the week ending February 28, well above expectations for a 2.2 million-barrel build, though still lower than the previous week’s rise of 11.4 million barrels.

Traders are now awaiting official inventory data from the U.S. Energy Information Administration, due later on Thursday, for confirmation of the increase.