Summary:
- Brent settled up around $4, or circa 4%, while WTI gained circa 3.5%
- Both benchmarks were up more than $5 at one point, with Brent touching its highest since September 29 (intraday highs near $106 for Brent and $93 for WTI)
- Gains were pared after President Trump said Washington was holding productive talks with Iran and pledged no attack before the November 3 midterm elections
- Iran’s foreign minister said Tehran would reply to the US response on reopening the Strait of Hormuz within days, while the US added fresh sanctions targeting 17 vessels
- Hurricane Isaias has shut in roughly 1.3 million barrels per day, close to two-thirds of US Gulf of Mexico oil output, ahead of landfall on Friday
- Unverified: Iran’s Fars news agency reported mine explosions involving tankers in the southern Strait of Hormuz, a claim not yet confirmed by other sources
Full session wrap is here:
Late headline: unconfirmed Hormuz explosions
Iran’s Fars news agency reported late in the session that several powerful explosions had occurred in the southern part of the Strait of Hormuz, saying tankers it described as violating regulations had struck mines laid in the area. The report cited military sources via a Fars security and defence reporter. The claim comes from a single Iranian outlet and has not been independently confirmed; there was no immediate verification of the number of vessels involved, their identities, any casualties or damage. Traders will be looking for confirmation from shipping authorities, maritime security agencies or other governments before treating it as established. If corroborated, it would mark a significant escalation, given that the strait carried around a fifth of global oil and fuel shipments before the war.
Oil: strike fears drive gains, Trump trims them
Oil prices settled around 4% higher on Thursday as renewed worries over the Middle East war combined with hurricane-related supply disruption on the US Gulf Coast. Brent crude futures closed up around $4 near $104 a barrel, while US West Texas Intermediate rose circa 3.5% to settle around $91.50.
Benchmarks climbed through the European and US sessions amid reports that Washington had completed operational plans for possible strikes on Iran ahead of the November midterms, although no final decision had been made. At their peak, both contracts were up more than $5, with Brent near $106 and WTI around $93. Brent touched its highest level since September 29.
Prices retreated sharply after Trump posted that the US was having productive discussions with Iran and would not attack the country before the November 3 midterm elections. That pushed Brent down toward $101 and WTI to around $89 at the session lows, before both recovered to settle firmly higher.
Iran: diplomacy and pressure run in parallel
Several Middle East headlines moved prices during the day. An adviser to Iran’s supreme leader said the Strait of Hormuz would not reopen until outstanding issues are resolved, which lifted crude. Foreign Minister Abbas Araqchi then said negotiations were continuing and Tehran was reviewing the US response to its proposal, which would reopen the strait within seven days, with a reply due within days. That remark weighed on prices.
At the same time, the US Treasury imposed new sanctions targeting individuals, networks and 17 vessels involved in shipping Iranian crude, oil products and petrochemicals, aiming to increase economic pressure on Tehran. Later, Axios reported that any resumption of major US combat operations against Iran would be expected to include large-scale strikes on energy facilities, infrastructure and nuclear sites.
Gulf security: Saudi assets in focus
A Houthi spokesperson warned all workers at Saudi oil facilities, including engineers and technical staff, against being present in areas the group regards as targets, a headline that pushed crude higher. France and Saudi Arabia are studying options involving French military assets to help protect the Yanbu oil terminal, according to France’s armed forces chief of staff. Syria is also reportedly weighing military assistance to Saudi Arabia in its conflict with the Houthis, with options ranging from defensive aid to deploying forces in an offensive role, according to US and Syrian officials.
Shipping risk has risen through October as the conflict enters its eighth month. Attacks on tankers transiting the strait last week reached their highest level since the war began, even as Gulf producers increased exports. One energy analyst said the frequency of Iranian attacks on vessels was at a peak and likely to intensify.
Hurricane Isaias: Gulf output curtailed
Hurricane Isaias is moving toward US offshore production areas ahead of an expected landfall on Friday. US Gulf of Mexico producers had shut in roughly 1.3 million barrels per day, close to two-thirds of current oil output, as of Thursday, according to the US Marine Minerals Administration. Shell and Chevron said on Wednesday they were curtailing offshore operations, while BP removed all personnel and halted production at its Na Kika and Thunder Horse platforms.
What to watch
Thursday’s rally followed a lower settle on Wednesday, when the International Energy Agency agreed to accelerate stock releases and prioritise diesel supplies as governments contend with record fuel prices. Near term, the market’s focus is on Tehran’s reply to the US proposal, any confirmation or denial of the Fars report, and the extent and duration of Gulf of Mexico shut-ins once Isaias makes landfall.
This article was written by Eamonn Sheridan at investinglive.com.