Oil price climbs amid warnings world faces 'largest-ever supply disruption'
- Brent crude soared above $100 this morning as volatile run continues
Oil is nearing $100 a barrel again this afternoon as Trump said he cares more about stopping Iran than higher prices.
Brent crude soared above $100 at one point this morning, after Iran attacked three vessels, before falling back to hover around $95. This afternoon, prices are on the brink of breaking the $100 barrier after the President's comments.
In a social media post, Trump said: 'The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money. BUT, of far greater interest and importance to me, as President, is stoping an evil Empire, Iran'.
Moments later, Iran's Supreme Leader made his first public address and vowed to keep the Strait of Hormuz shut.
This morning, the International Energy Agency, which released 400 million barrels from emergency reserves on Wednesday, said that the world faces its biggest ever oil supply disruption.
It expects it to drop by 8 million barrels per day in March.
Middle East Gulf countries, including Iraq, Qatar, Kuwait, the UAE and Saudi Arabia, have cut total oil production by at least 10 million bpd - almost 10 per cent of global demand - as a result of the conflict, the IEA said.
The FTSE 100 sank 0.5 per cent, or 50 points, at the opening bell while other European markets also opened lower.
Oil shock: Tankers are unable to make their way through Strait of Hormuz pushing prices up
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The Stoxx Europe 600 dipped 0.4 per cent while Germany's Dax is down 0.37 per cent, as markets contend with the escalating conflict and the knock-on effect on oil prices.
It comes just days after markets staged a minor relief rally after Donald Trump indicated the Iran conflict would end 'very soon'.
The IEA's announcement on Thursday had little impact on crude markets after the release had been trailed earlier in the week.
Panmure Liberum analysts said it was 'deemed inadequate to offset the impact of supplies already lost,' said Panmure Liberum analysts. 'The release of oil from strategic reserves is a temporary measure and is a sticking plaster on the lost supply.'
Neil Wilson, Saxo UK Investor Strategist, said that it was a 'huge release but half of it is already accounted for.'
'We've already lost about 200million barrels, with about 14million barrels per day (bpd) since the conflict started,' Wilson said in a note.
'So unlike in 2022 with Russia there has been an actual loss of barrels from the market, rather than just flows being reset and redirected (e.g in 2022 from Europe to India and China).'
He added: 'Reserves are stockpiles sitting as existing inventory – the market is more concerned about flows. The reserves can maybe replace about 2million bpd but the market is short about 6.2 million bpd at least.
'The timing and the pace of the release will be important to the market's reaction, but it seems unlikely that the flow of reserves can make up for the lost flow of production. This is a temporary and limited solution – the key is to reopen the Strait of Hormuz.'
The IEA now projects world output will fall by 8million barrels a day this month, its lowest level since the first quarter of 2022.
Oil prices are around 40 per cent higher than at the start of the conflict, and around 60 per cent higher than at the start of the year when brent crude traded at around $61 a barrel.
Gas prices have also been hit by concerns over disrupted liquefied natural gas (LNG) supply.
European gas futures surpassed €52/MWh – up over 60 per cent since the start of the conflict – while UK gas prices are up to 132p per therm, from 78p at the end of February.
Defence stocks Babcock and BAE Systems led the FTSE 100's biggest risers this morning, both up around 2.75 per cent. Meanwhile, financial companies came under pressure again with HSBC tumbling over 4 per cent, while Schroders dipped 2.5 per cent.
EasyJet and British Airways owner IAG remain under pressure in the face of rising fuel prices.
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