Brent crude fluctuated as news of a fresh release from emergency reserves helped offset increasing supply risks stretching from the Strait of Hormuz to the Black Sea.
The global benchmark edged 0.1% lower to settle near $106 a barrel after International Energy Agency member nations pledged to complete the release of 100 million barrels of oil that are still outstanding from an intervention in March. West Texas Intermediate futures, which have diverged from Brent in recent sessions, ended the day 3% higher.
US officials had informally lobbied for an IEA release at a gathering in Paris, Bloomberg reported earlier, following several similar public demands from key White House officials. President Donald Trump has been working to tame high gas and soaring diesel prices at home, with rising energy costs stemming from the US war on Iran among key voter concerns ahead of midterm elections next month.While additional supplies from the emergency release and increased flows through Hormuz are providing some relief, physical markets continue to signal tightness. European diesel futures, meanwhile, have more than doubled since the start of the year as disruption to fuel flows from Russia and the Persian Gulf persist. US Central Command confirmed on Thursday that a container ship that sank in Hormuz this week was struck by an Iranian projectile.
The global crude oil market also remains tight, with Brent up more than 70% this year as the Middle East war drags on. Dated Brent, a critical physical-market benchmark, is holding near $130 a barrel. Iran-backed Houthi rebels have ramped up strikes against Saudi Arabia this month, while Tehran has accelerated attacks on ships in the Strait of Hormuz.
“Oil prices are likely to respond immediately to a resumption in fighting” between the US and Iran, Eurasia analysts wrote in a note. “Escalation is likely to drive oil prices into a higher band of $110 to $125, for as long as the escalatory phase lasts – likely several weeks, if not longer.