MARKET NEWS

(Bloomberg) -- Brent crude futures hit $90 a barrel for the first time in almost two years as the war in the Middle East unleashed a wave of disruption across energy markets, with shipping through the Strait of Hormuz at a near-total halt.

The global benchmark added as much as 7.6%, while West Texas Intermediate topped $85 for the first time since April 2024. Futures are up more than a fifth this week.

The Wall Street Journal reported that Kuwait has begun cutting production at some oil fields after running out of places to store bottled-up crude, the latest sign of a hit to supply in the region. Citigroup Inc. estimates that the crude oil market is losing 7 million to 11 million barrels a day of supply due to the disruption through Hormuz.

Crude surged even after US President Donald Trump signaled “imminent action” to reduce pressure on prices, while National Economic Director Kevin Hassett denied that the White House would tap the Strategic Petroleum Reserve, a cache of crude held in vast underground caverns, anytime soon. The Treasury Department eased curbs on India’s ability to buy Russian oil.

“We’ve got a whole flow chart of tools to use,” Hassett told Bloomberg in a television interview.

Japan was also reportedly was considering tapping reserves. No action has yet been taken, though market participants are speculating that a coordinated release from multiple nations’ emergency oil inventories could be enacted to maximize impact.

With no sign of a let-up in hostilities, Goldman Sachs Group Inc. flagged the risk of scenarios for oil topping $100 a barrel if disruption were to extend; European diesel futures headed for a weekly gain of more than 50%; and central banks signaled their unease about a possible resurgence in inflation. Qatar’s energy minister warned that oil could hit $150.

There has been a “near-total” pause in commercial traffic through Hormuz, according to the Joint Maritime Information Center, a multinational naval advisory group. The collapse stems from “security threats, insurance constraints, operational uncertainty, and effective disruptions,” it said.

Oil markets have been rocked by the conflict, which has ensnared about a dozen nations since the US and Israel launched their campaign on Feb. 28. As the hostilities have flared, shipping through the key strait has all but ended, choking off oil supplies to global markets and prompting producers to start shutting-in output. Refineries and tankers have been hit.

Qatar’s energy minister told the Financial Times that crude could soar to $150 a barrel in two to three weeks if tankers and other merchant vessels were unable to pass through Hormuz.

Iranian Foreign Minister Abbas Araghchi told NBC News his country had no intention to negotiate and was ready for a ground invasion, although Trump commented later to the same station that he was not thinking about such a move. Iran fired a barrage of missiles and drones targeting countries across the Persian Gulf overnight, while Israel renewed airstrikes on the Islamic Republic.

The prospect of a drawn-out conflict has put the market on edge. Last year, about 20 million barrels of oil and petroleum products flowed through the Strait of Hormuz every day, according to a tally from the International Energy Agency. Ship-tracking data this week has suggested marine traffic through the artery has collapsed.

With importers struggling to get barrels, the US Treasury Department’s Office of Foreign Assets Control issued a short-term waiver to allow India to buy Russian crude. The move “only authorizes transactions involving oil already stranded at sea,” Treasury Secretary Scott Bessent said.

Indian refiners have already bought more than 10 million barrels of Russian crude, according to people with direct knowledge of the deals. Much of that may have been purchased even before the one-month waiver announced late Thursday in Washington. India’s Reliance Industries Ltd. is seeking to buy Russian oil, a person familiar with the matter said.

Goldman Sachs warned that a prolonged disruption at Hormuz — which links the Persian Gulf to global markets and typically carries about a fifth of global oil flows — could lift prices far higher, although the bank’s base case at present is for a gradual recovery of shipments and futures to average $76 a barrel in the second quarter.

“Let’s say you have another five weeks of very low flows of oil through the strait,” Samantha Dart, the co-head of global commodities research at the Wall Street lender, told Bloomberg Television, speaking before the JMIC advisory was issued. “It is possible we would see Brent prices cross the $100-per-barrel threshold.”

US Interior Secretary Doug Burgum said the administration was weighing a range of options for addressing the spike in oil and gasoline — with US pump prices hitting $3.32 gallon on Thursday, the highest highest since 2024. “Everything is being considered,” Burgum said, adding that the list included actions that would have immediate impact as well as longer-term, more complex moves.

In Asia, signs of strain for top economies are mounting. China has told major refiners to suspend exports of diesel and gasoline, reflecting efforts to prioritize domestic needs. Elsewhere, Japanese refiners asked their government to release oil from strategic reserves.

As the conflict widens, constraining supplies from the Middle East, Saudi Arabia raised the price of its main oil grade for buyers in Asia for April by the most since August 2022. Riyadh is also diverting millions of barrels to its Red Sea ports to avoid the Strait of Hormuz.

Product prices have soared. In Europe, low-sulfur gasoil futures have rallied 50% on ICE Futures Europe so far this week, the biggest move on record.

In a sign of near-term tightness, Brent’s prompt spread — the difference between its two nearest contracts — widened to $5.76 a barrel in backwardation, a bullish pattern. A month ago, it was 58 cents.