Oil Surpasses $100 Despite Historic Reserve Withdrawal Decision

SadaNews - Brent crude has once again jumped above the $100 per barrel mark after Oman evacuated ships from an oil export terminal, and two tankers were attacked in Iraqi waters, as the risks associated with the war with Iran expand throughout the Middle East.

The global benchmark for oil rose by up to 10% to reach $101.59 per barrel, while West Texas Intermediate crude neared $96.

Oman evacuated ships from the "Fahal Port" as a precautionary measure, according to informed sources. The facility is located outside the Strait of Hormuz and is one of the few remaining ports through which Middle Eastern oil can be shipped to global markets.

Iraq also halted operations at its oil terminals after ships were targeted, according to the director of the General Company for Ports of Iraq in official media.

The attacks that occurred within the Arabian Gulf and the measures taken by Oman highlight the far-reaching impacts of the ongoing conflict, overshadowing the announcement by the "International Energy Agency" regarding the historic release of oil reserves in an attempt to calm rising prices.

Closure of Hormuz Drives Producers to Cut Production

The vital Strait of Hormuz, through which nearly one-fifth of global oil supplies pass, remains effectively closed, prompting major producers in the Gulf to cut production.

Natural gas prices and products like diesel have also risen alongside oil prices, after Brent and West Texas Intermediate crude prices approached $120 per barrel on Monday before later declining. Markets have seen sharp fluctuations this week amid significant price movements.

Goldman Sachs has warned that oil prices could exceed the peak reached in 2008 if oil flows through the Strait of Hormuz remain weak until the end of March, according to a research note in which the bank updated its price forecasts.

Brent crude reached a record high of $147.50 per barrel in that year amid rising global demand and slowing supply growth.

Neil Beveridge, director of research at Sanford C. Bernstein, told Bloomberg TV: "The only thing that will actually bring oil prices down is the reopening of the Strait of Hormuz."

He added that withdrawal rates from strategic reserves "do not compare to the level of disruption of about 20 million barrels per day" resulting from the closure of the strait.

Reservoir Release Fails to Calm Markets

Iraq was one of the first producers in the Gulf to begin cutting production following the near-full closure of the Strait of Hormuz, with Kuwait and Saudi Arabia taking similar measures.

These cuts prompted the "International Energy Agency" to move by coordinating the release of 400 million barrels from reserves, a historic withdrawal that far exceeds the amount released after Russia's war on Ukraine in 2022.

The United States announced that it plans to release 172 million barrels as part of global efforts to calm prices. Global crude oil consumption stands at just over 100 million barrels per day, while Gulf-producing countries have had to cut about 6% of this amount so far, with further cuts likely in the Middle East.

Darrell Fletcher, managing director of commodities at Banornokburn Capital Markets, said: "This is what I was afraid of regarding the decision, as it was completely ignored, and prices are now higher." He added: "Perhaps the decision sent the wrong signal. What do they know that we don’t?"

Escalating Tensions Diminish Hopes of Ending the War

Oil prices also rose on Wednesday amid escalating political rhetoric surrounding the war. Iran informed regional intermediaries that any ceasefire would require guarantees from the United States not to conduct or support strikes against it in the future.

Washington is unlikely to accept these conditions, reducing the chances of an imminent end to the war.

During a speech on Wednesday in Kentucky, U.S. President Donald Trump reiterated that the war would soon end, but he also indicated that the United States would remain in the conflict as long as necessary to achieve its objectives.

Trump told attendees: "We don’t want to pull out early, do we?"