Oil Prices Surge Past $100 Amid Middle East Tensions and Supply Disruptions

Oil prices rebounded sharply on Thursday, recovering from a brief dip as fading hopes for a swift end to the Iran conflict reignited fears of prolonged disruption to global energy supplies. Brent crude rose $1.65, or 1.61%, to $103.87 per barrel, while US West Texas Intermediate gained $1.49, or 1.65%, reaching $91.81 per barrel. Wednesday’s slight optimism over a possible ceasefire had briefly pushed prices down more than 2%, but the market quickly reversed course.

The optimism surrounding a ceasefire has largely evaporated. Iran announced it was reviewing a US proposal to end hostilities but showed no intention of engaging in direct talks. Meanwhile, White House press secretary Karoline Leavitt warned that President Trump would “hit Iran harder” if Tehran refused to acknowledge a military defeat. With the conditions set by Washington appearing extremely stringent, investors are bracing for further volatility in oil markets.

Beyond the Iran conflict, supply pressures are intensifying on multiple fronts. At least 40% of Russia’s oil exports have been disrupted due to Ukrainian drone attacks, pipeline disputes, and tanker seizures. Iraqi output is also under strain, with storage tanks nearing capacity, according to Iraqi energy officials. The combined effect of supply interruptions from Iran, Russia, and Iraq has created what the International Energy Agency (IEA) describes as the largest oil supply shock in history.

The Strait of Hormuz, a critical chokepoint through which roughly 20% of the world’s crude oil and liquefied natural gas flows, remains nearly closed. Japanese Prime Minister Sanae Takaichi recently discussed the crisis with IEA chief Fatih Birol, requesting a coordinated release of strategic oil reserves to mitigate the impact of a prolonged conflict. Analysts warn that without such interventions, global energy markets could face sustained instability.

One mitigating factor is the rise in US crude inventories, which increased by 6.9 million barrels to 456.2 million barrels in the week ending March 20 — the highest level since June 2024 and above analyst expectations. Despite this, the overwhelming pressure from Middle East tensions and international supply disruptions is driving prices upward, raising concerns over global inflation, particularly in vulnerable regions like Africa.

source: Business day