Oil Prices Surge Amid Hormuz Tensions; IEA Reserve Plan Under Scrutiny

Oil prices increased by nearly 4% due to escalating tensions in the Strait of Hormuz. The International Energy Agency's plan to release a record oil reserve is seen as insufficient by analysts. Disruptions due to regional conflicts threaten global supply, pushing Brent and WTI futures higher.

The global oil market faced a fresh wave of instability as prices surged nearly 4% on Wednesday. This spike comes in the wake of recent attacks on ships in the Strait of Hormuz, amplifying concerns over supply disruptions. The International Energy Agency's proposal to release a historic 400 million barrels is being scrutinized by analysts who deem it inadequate to mitigate these fears.

Brent futures climbed $3.40, or 3.9%, to $91.20 a barrel, while U.S. West Texas Intermediate rose $3.25, or 3.9%, to $86.70 a barrel. The proposed release dwarfs the 182 million barrels released in 2022 post-Russia's Ukraine invasion but covers only about four days of global production. Analysts warn this move might not suffice amid prolonged Middle Eastern conflicts.

Further complicating the situation, three more vessels were attacked in the Strait of Hormuz, bringing the total to at least 14 since the current Iran conflict. This has nearly stalled shipping through the crucial strait, impacting about a fifth of the world's oil exports. The U.S. Navy's reluctance to provide escort due to high risks exacerbates the looming supply crisis.

(With inputs from agencies.)