Oil jumps as Hormuz tanker reports and Saudi attacks rattle markets
Brent crude settled at 95.82 dollars a barrel, up 3.3 percent, after reports of explosions on tankers in the Strait of Hormuz and claimed attacks on Saudi energy sites.
Oil prices jumped on Thursday after a day of alarming reports from the Gulf: explosions on tankers in the Strait of Hormuz and claimed attacks on Saudi Arabian energy sites.
Brent crude settled at 95.82 dollars a barrel, up 3.06 dollars or 3.3 percent, while United States West Texas Intermediate closed at 88.74 dollars, up 2.6 percent.
In energy markets, prices often move first and explanations follow. Traders do not wait for every report to be confirmed, because the cost of being unprepared for a supply disruption is far higher than the cost of reacting to a report that later proves exaggerated.
Brent is the international benchmark, while West Texas Intermediate is the main United States benchmark. When both rise together, it signals a broad reassessment of risk.
Tankers, a strait and an unverified account
Iran said four oil tankers were hit by explosions in the strait after ignoring warnings and entering restricted areas. That account could not be immediately verified, and no ship was named in the reports available on Friday.
The Strait of Hormuz matters out of all proportion to its size. It is the narrow waterway connecting the Gulf to the open ocean, and a large share of the world's seaborne oil and liquefied natural gas passes through it from producers in the region. There is no easy alternative route for much of that supply. Even a brief closure, or the credible threat of one, forces traders to price in delays, higher insurance costs and the possibility that cargoes cannot move at all.
That is why reports involving tankers in the strait draw such an immediate reaction, and why the lack of verification on Thursday did not calm markets. No ship was named, and independent confirmation was not available, but shipowners and insurers must make decisions in real time. In past episodes of tension in the Gulf, the first effects have often appeared not in physical shortages, but in the cost and willingness to send vessels through the waterway — costs that feed quickly into the price of crude.
Separately, Yemen Houthi forces claimed strikes on the East-West pipeline, Yanbu and an Aramco building in Riyadh, with no damage confirmed. Each of those names carries weight for oil traders. The East-West pipeline is valuable because it offers Saudi Arabia a route for exports that does not depend solely on Gulf terminals. Yanbu is a key Red Sea port. Aramco is the Saudi state oil company at the centre of the kingdom's production. A claim touching all three, even unconfirmed, touches the question markets care about most: whether Saudi supply itself could be at risk.
Politics raises the premium
President Donald Trump threatened renewed military strikes against Iran and said on Thursday that the United States does not need a deal with Iran.
Remarks of that kind add what traders call a geopolitical risk premium to the price of oil. The premium is not payment for oil that has been lost. It is payment for oil that might be lost if threats become action, if retaliation follows, or if diplomacy that might have lowered tensions is taken off the table. When a United States president publicly plays down the need for a deal while threatening strikes, traders hear a lower chance of a negotiated calming of the situation in the near term, and they adjust prices accordingly.
The International Energy Agency is due to publish its monthly oil-market report on Friday, which traders will read for a calmer view of supply and demand. The agency's monthly assessment is one of the market's regular reference points, setting out how much oil the world is producing and consuming and how much is held in storage. Its value on Friday will be partly in contrast to Thursday's headlines: a methodical account of barrels and inventories against which investors can judge whether the fear in the price is proportionate to the underlying balance.
What it means beyond the trading floor
For drivers, the effect is not instant: pump prices follow crude with a lag of days to weeks. But if Brent holds above 90 dollars and shipping through the strait stays disrupted, the recent fall in petrol prices is likely to stall.
The lag exists because the fuel sold at a filling station today was bought, refined and delivered under contracts struck earlier, and because taxes and retail margins make up a large part of the final price in many countries. A one-day jump in crude, on its own, changes little at the pump. A sustained period above 90 dollars is different. It works its way into wholesale prices, then into forecourt prices, and from there into the costs of everything moved by road.
What Thursday established was how quickly the oil market can be unsettled when the strait, Saudi infrastructure and superpower threats appear in the same day's headlines.
