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Oil Jumps Again as US Escort Plan for Hormuz Fails to Bring Calm - BLOOMBERG
(Bloomberg) -- Oil extended gains as fresh attacks flared in the Middle East and traders weighed a US plan to insure and escort tankers passing through the Strait of Hormuz, with traffic in the vital waterway all but halted.
Brent rose toward $84 a barrel after rallying about 12% over two days, the biggest gain since 2020, while West Texas Intermediate was near $77. President Donald Trump said on Tuesday the US International Development Finance Corporation would offer insurance to vessels to help ensure the flow of energy and other trade, providing a naval escort “if necessary.”
The US move follows signs of mounting disruption for producers in the region from the effective closure of the key trade route. Iraq — the second-biggest OPEC producer — has begun shutting the Rumaila field, the nation’s biggest, and the West Qurna 2 project, according to people familiar with the matter. When complete, the halts will stop a majority of the country’s output.
In Saudi Arabia, major oil-storage sites are filling rapidly, according to geospatial analytics company Kayrros.
The global oil market has been pitched into turmoil by the US and Israeli war against Iran, with strikes and counter-strikes spreading across the Middle East. The war has halted trade, driven producers to shut in output, and forced the closure of a major refinery and gas-export plant. Surging prices of crude, gas and petroleum products have raised the specter of a global energy crisis.
“Naval escorts will be sitting ducks to Iranian attacks,” ING Groep NV said in a note from analysts including Warren Patterson, head of commodities strategy. “So, the US may choose to wait before escorting vessels until it gauges that Iran’s ability to attack has been degraded.”
Goldman Sachs Group Inc. raised its average second-quarter Brent forecast by $10 to $76 a barrel. “We assume that low oil flows via the strait in March will lead to large declines in OECD inventories and Middle East oil production,” analysts including Daan Struyven said in a note.
Hostilities continued into the fifth day of the conflict. Israel and Iran exchanged airstrikes and missile fire, while Saudi Arabia’s Ministry of Defense said nine drones and two cruise missiles were intercepted. Separately, US Central Command reported that it had so far destroyed 17 Iranian ships as well as hundreds of launchers and drones.
