Oil prices rebounded above $100 per barrel on Thursday, as ongoing Middle East tensions overshadowed the International Energy Agency’s unprecedented release of strategic crude reserves. Brent crude rose over 9% to $101.59, while West Texas Intermediate spiked near $96, recovering from earlier dips following the IEA’s announcement.
The IEA confirmed on Wednesday that its member states agreed to release 400 million barrels from emergency stocks, the largest collective action in history, with the United States contributing 172 million barrels. However, this coordinated effort failed to calm markets amid fears that critical energy supply routes remain compromised. The Strait of Hormuz, through which approximately 20% of global oil passes, is effectively disrupted due to the conflict between Iran and the US-Israeli coalition. Tehran has intensified efforts to target shipping and regional infrastructure, including reported strikes on two tankers in Iraqi waters and an attack on fuel storage facilities in Bahrain. Saudi Arabia also intercepted drones targeting its Shaybah oil field, while Iraq, Kuwait, and Saudi Arabia have cut output in response to the crisis.
Analysts stressed that releasing stored oil does not address the core problem of halted flows. “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.” Neil Wilson of Saxo Markets noted the move had been largely priced in, adding that the war has already caused a loss of around 200 million barrels of supply. “Reserves are stockpiles sitting as existing inventory — the market is more concerned about flows,” he stated.
The economic and market fallout is widening. supply disruptions threaten not only energy but also fertiliser shipments through the Strait, impacting global food production. Airlines face rerouting costs and higher fuel expenses, with Air New Zealand announcing cuts to 1,100 flights. Rising oil prices have reignited inflation concerns, dampening expectations for interest rate cuts and triggering declines across global equities. Major indices in Tokyo, Hong Kong, London, and New York fell.
Iran has threatened a prolonged “war of attrition” aimed at destroying the global economy, with Revolutionary Guard officials warning of strikes on economic targets linked to the US and Israel. Meanwhile, US and Israeli officials maintain that Iran’s capacity is severely degraded, though Israel’s military indicated its campaign continues with “a broad bank of targets” remaining.
The situation underscores the fragile balance between coordinated policy responses and persistent geopolitical risk. With the Strait of Hormuz threatened and no resolution in sight, analysts suggest $90 to $100 per barrel may become a new baseline, prolonging economic uncertainty for oil-importing regions, particularly in Asia and Europe.
