Oil prices surge despite global action to boost reserves

Oil prices have risen further despite a global deal to release a record 400 million barrels of reserves as Iran continued to strike key energy and shipping infrastructure.

Brent crude rose by another 4% to nearly 96 US dollars a barrel in morning trading on Thursday, following similar gains on Wednesday, as prices failed to ease in spite of the International Energy Agency (IEA) move to boost worldwide oil reserves.

The IEA, which includes the UK, said the oil release – the largest in the 50-year history of the 32-nation alliance – would account for around a third of its 1.2 billion barrel emergency stockpile as it looked to stabilise markets.

But oil and markets remained under pressure after three more cargo vessels were hit in the Gulf as Iran steps up its threats to disrupt oil supply and shipments.

The conflict in Iran has already halted shipments through the Strait of Hormuz, through which a fifth of the world’s oil supplies and seaborne gas are carried.

This has sent oil and gas prices soaring, with crude at one stage hitting nearly 120 dollars a barrel earlier this week.

Stock markets have tumbled worldwide amid the fallout and were lower again on Thursday, with the FTSE 100 Index in London down 0.7% or 67.9 points lower at 10285.9 in early trading.

The Cac 40 in France and Dax’s Germany were both 0.4% lower, following declines overnight in Asia.

Chris Beauchamp, chief market analyst at IG, said: “Overnight attacks on shipping off Iran are the stuff of nightmares for investors, confirming that one of the world’s key waterways is closed to shipping and resulting in a fresh surge in oil prices.

“Brent and US crude prices have a permanent bid underneath them, at least until there’s a ceasefire in place.”

Markets expert Francesco Pesole, at ING, added: “Understanding how far the conflict and supply shocks will last remains the priority for markets.

“Emergency measures to ease oil supply disruptions may be sending a hidden negative signal to markets that world leaders see little room for quick de-escalation.”