Oil Rallies Toward $100 as Tanker Attacks in Iraqi Waters

Key Takeaways:

• Oil Prices Surge 7%: Despite the G7 and IEA announcing a record 400-million-barrel oil release, prices jumped back toward $99/bbl (Brent) and $93/bbl (WTI) following fresh sabotage in the Gulf.

• Sabotage in Iraqi Waters: Two international oil tankers were set ablaze in the northern Persian Gulf near Iraq and Kuwait. Footage shows the vessels engulfed in flames, with local reports attributing the strikes to Iranian drones.

• Hormuz Blockade Persists: Iran has officially warned that “no crude will pass” through the Strait of Hormuz. With at least 14 ships now struck in the region, shipping insurance has become nearly unobtainable.

Market Summary:

The global energy market is currently in a “state of war” between government policy and physical sabotage. Early on Wednesday, it appeared that the International Energy Agency (IEA) had successfully placed a “ceiling” on prices by authorizing the largest emergency oil release in history—totaling 400 million barrels. The U.S. alone committed 172 million barrels from its Strategic Petroleum Reserve (SPR), a move intended to stabilize fuel costs.

However, the “relief rally” was short-lived. By Thursday morning, the market outlook flipped as reports emerged of two tankers attacked in Iraqi waters near the port of Umm Qasr. These strikes prove that the conflict has expanded beyond the Strait of Hormuz and is now targeting the “safe” staging areas for Iraqi and Kuwaiti exports. As a result, Iraq has reportedly suspended operations at its southern oil terminals, effectively removing even more supply from a market already missing 6.7 million barrels per day.

The “Ceasefire” Smoke Screen:

While President Trump continues to claim the war is “nearly over,” the reality on the ground is far more aggressive. Defense Secretary Pete Hegseth confirmed that the U.S. has entered its most intense phase of bombing yet. Irans counter-strategy has been to create “global economic pain” by targeting oil infrastructure and demanding long-term security guarantees that the U.S. and Israel are unwilling to provide. This diplomatic deadlock is weighing on Gold and the Dollar, as traders realize this may become a “long-term war of attrition” rather than a quick surgical strike.

The Bottom Line:

The 400-million-barrel reserve release is being described by analysts as “a drop in the bucket” compared to the total loss of the Strait of Hormuz. Because the Strait accounts for 20% of global daily demand, no amount of stored oil can fully replace the missing flow. For the upcoming trading sessions, the $100 level remains the “psychological battleground” for Brent crude. If the sabotage continues to move closer to the Saudi and Kuwaiti coasts, we could see a return to the $120 record highs seen earlier this week.