Oil futures moved notably higher in Asian trading on Thursday as the conflict in the Middle East prolonged into a sixth consecutive day with no sign of de-escalation, sharpening market anxiety about potential interruptions to crude supplies from a region that supplies a substantial share of global exports.
At 22:24 ET (03:24 GMT), Brent futures for May delivery were trading up about 3% at $83.84 per barrel, while West Texas Intermediate (WTI) crude rose roughly 3.5% to $77.29 per barrel. Both contracts had finished largely flat on Wednesday after a turbulent session.
Market attention has centered on multiple developments tied to the conflict. The confrontation began last Friday when the U.S. and Israel executed coordinated strikes on Iran, triggering a sequence of retaliatory missile and drone strikes that spread across the region. Those exchanges raised immediate concerns about the security of energy infrastructure in key producing areas.
Tensions escalated further this week when the U.S. sank an Iranian warship near Sri Lanka in international waters, a move that highlighted how the fighting had widened beyond the confines of the Persian Gulf. Reports also circulated that Iran’s Ministry of Intelligence had contacted Washington to seek negotiations to end the hostilities; Tehran rejected that account, calling it "pure falsehood" and accusing Western media of spreading misinformation. That denial cooled hopes of a quick diplomatic resolution.
Supply-side fears intensified after Iran effectively closed the Strait of Hormuz - a strategic chokepoint through which roughly one-fifth of the world's oil shipments transit - disrupting tanker movements and raising the prospect that sustained fighting could sharply curtail Gulf crude exports. The interruption has already had knock-on effects for some producers: reporting showed Iraq declared force majeure on certain crude shipments as flows through the Strait faced severe disruption.
At the same time, U.S. data provided a counterweight to the bullish supply narrative. The American Petroleum Institute (API) reported that U.S. crude inventories rose by about 5.6 million barrels in the week ended Feb. 28, well above estimates for a build of 2.2 million barrels and down from a prior increase of 11.4 million barrels. Traders were awaiting official confirmation from the U.S. Energy Information Administration (EIA), which was due to publish its own inventory figures later on Thursday.
The combination of an escalating geopolitical conflict that has disrupted shipping lanes and a larger-than-expected U.S. stock build created a complex backdrop for prices, producing both upward pressure from supply fears and downward elements tied to domestic inventory growth. Market participants continued to monitor developments closely for signs of either further escalation or progress toward de-escalation.
Market implications
- Heightened risk of supply curtailments from Gulf producers.
- Disrupted tanker traffic through the Strait of Hormuz has already led to force majeure declarations on some exports.
- U.S. crude inventory build reported by the API adds a bearish element while traders await EIA confirmation.