Oil prices soared back above $100 on Thursday as Iran’s fresh attempts to hit energy supplies in the Middle East and threats of a broader economic shock overshadowed a record release of strategic crude by the International Energy Agency (IEA).
As U.S.–Israel strikes on Iran approached their third week, the conflict showed no signs of easing, with Tehran responding with retaliatory attacks across the Gulf.
The IEA said Wednesday that its members had agreed to release 400 million barrels of oil from their reserves—their largest coordinated release ever—with 172 million barrels coming from the United States.
However, the move failed to calm fears about disruptions to Middle East energy supplies, with the Strait of Hormuz—through which about a fifth of global crude passes—effectively shut down.
As Iran stepped up attempts to disrupt supplies across the region, two tankers in Iraqi waters were reported struck Thursday. Baghdad had already said it was cutting output because of the crisis, with Kuwait and Saudi Arabia following suit.
Also Thursday, Bahrain reported that Iran had attacked fuel tanks in the country, while Saudi Arabia said it intercepted drones headed toward the Shaybah oil field.
Both major crude benchmarks surged. Brent crude jumped more than nine percent to as high as $101.59 per barrel, while West Texas Intermediate (WTI) rose to just under $96. The two had already surged as much as 30 percent on Monday, reaching nearly $120 per barrel.
With hostilities showing no sign of ending, analysts warned that $90–$100 per barrel could become the new normal for some time.
Iran said it was ready for a long war of attrition that could “destroy” the world economy after firing on two commercial ships and threatening vessels linked to the United States or its allies.
The Islamic Revolutionary Guard Corps warned Wednesday it could strike “economic centers and banks” tied to U.S. and Israeli interests.
“The United States and Israel must consider the possibility that they will be engaged in a long-term war of attrition that will destroy the entire American economy and the world economy,” Ali Fadavi, adviser to the Guards’ commander-in-chief, told state television.
Analysts warn that prolonged disruption to shipping through the Strait of Hormuz—which also carries roughly one-third of the fertilizer used in global food production—would deliver a severe economic shock, particularly in Asia and Europe.
Airlines are among the sectors hardest hit, with many forced to reconsider flight routes through the Middle East while facing rising fuel costs. Air New Zealand said Thursday it would cut 1,100 flights over the next two months.
The surge in oil prices has reignited fears of another spike in inflation and warnings that central banks may need to raise interest rates again, after recently considering rate cuts.
That uncertainty weighed on global equities, which resumed their decline Thursday.
Markets in Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Bangkok, Wellington, Singapore, Taipei, Manila, and Jakarta were all sharply lower.
“When the geopolitical fire alarm is still ringing around the Strait of Hormuz, dumping barrels from emergency stockpiles is less a solution than a symbolic gesture,” said Stephen Innes of SPI Asset Management.
“It might dampen volatility for a few hours, but it cannot change the geometry of risk when the world’s most important shipping artery is under threat.”
Saxo Markets analyst Neil Wilson said the reserve release had largely been priced in by investors, helping push oil below $100 earlier in the week, while remarks from U.S. President Donald Trump about ending the war quickly also weighed on prices.
He added that the conflict had already caused the loss of roughly 200 million barrels of oil supply.
“Reserves are stockpiles sitting as existing inventory—the market is more concerned about flows. Moving barrels from point A to point B is not the same as producing new oil,” Wilson said.
Trump nevertheless insisted the strikes had already effectively defeated Iran.
“They are pretty much at the end of the line,” he told reporters after a speech to supporters in which he declared: “We’ve won… we won—in the first hour it was over.”
Israel’s military, however, signaled that the campaign was far from finished, saying it still had “a broad bank of targets.”