TLDR
- Brent crude advanced 2.6% to reach $83.54 per barrel; WTI gained 3.1% to $76.96 during Thursday trading
- Tanker movement through the Strait of Hormuz plunged more than 95% as Iran effectively seals the waterway
- Iraqi authorities announced force majeure, slashing production by approximately 1.5 million barrels daily
- Market experts caution Brent could surge to $140/barrel under complete blockade; $100 under partial closure
- Beijing ordered refineries to stop fuel exports; Tokyo considered tapping emergency oil stockpiles
Global oil markets rallied sharply Thursday as the Middle East crisis reached its sixth consecutive day with no resolution in sight, driving crude values to levels not seen since July 2024.
Brent crude futures jumped 2.6% to settle at $83.54 per barrel, while West Texas Intermediate gained 3.1% to close at $76.96. The rally marks the fifth consecutive session of gains for both oil benchmarks.
The military escalation commenced last weekend following joint U.S.-Israeli airstrikes targeting Iranian infrastructure. Tensions intensified further after American naval forces destroyed an Iranian military vessel near Sri Lanka in what the Pentagon described as international waters.
On Wednesday evening, the U.S. Senate rejected a resolution that would have mandated Congressional authorization for ongoing military operations, with the vote breaking predominantly along partisan divisions.
Iranian officials firmly denied media reports suggesting Tehran’s intelligence apparatus had initiated backdoor negotiations with Washington, dismissing such claims as “pure falsehood.”
The Strait of Hormuz Blockade
The narrow Strait of Hormuz has emerged as the focal point of the current energy crisis. International Energy Agency data indicates approximately 20 million barrels of oil and petroleum products transited the waterway daily throughout 2025.
Vessel tracking information compiled by Bloomberg reveals maritime traffic has collapsed by more than 95% through the strategic chokepoint. The overwhelming majority of commercial shipping has rerouted to avoid the dangerous passage.
Baghdad officially declared force majeure on multiple crude export contracts due to the transportation crisis. Reuters reported that Iraqi production has been curtailed by nearly 1.5 million barrels per day, according to government sources.
As OPEC’s second-largest crude producer, Iraq’s supply disruption represents a major factor driving the current price acceleration.
Despite an Iranian military official stating on state-controlled television that Tehran does “not believe in closing” the strategic waterway, virtually no commercial vessel operators are willing to risk the transit.
The White House has floated proposals to offer insurance coverage guarantees and potential military convoy protection for tankers. However, Marsh, the world’s leading insurance brokerage, indicated such arrangements could require several weeks to implement.
One oil carrier, the Sonangol Namibe, sustained damage during an attack in the northern Persian Gulf region. The vessel reported water leaking from a ballast compartment, though no crude oil spilled.
How Asian Importers Are Responding
Chinese authorities directed state-controlled refineries to immediately suspend diesel and gasoline shipments abroad. The directive reflects Beijing’s strategy to secure domestic fuel supplies as the disruption tightens global availability.
Japanese officials formally requested government approval to draw down the nation’s strategic petroleum reserves. Meanwhile, a prominent Indian refining company notified clients it would halt all petroleum product exports.
Energy analysts at ING projected that a complete closure of the strait could propel Brent crude to $140 per barrel. Under a scenario involving partial disruption with intermittent tanker attacks, prices could spike toward the $100 threshold before stabilizing in an $80–$90 trading range.
The American Petroleum Institute reported U.S. crude inventories expanded by 5.6 million barrels during the week concluding February 28. The increase significantly exceeded analyst forecasts of a 2.2 million barrel build.
The U.S. Energy Information Administration was scheduled to release official inventory figures later Thursday.
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