Oil climbs around 4% on dual supply threats: Iran strike worries and Hurricane Isaias

Summary:

• Brent crude ended the session roughly $4 higher, representing a gain of about 4%, while WTI rose by approximately 3.5%
• During the session, both contracts climbed over $5 at their peaks, sending Brent to its highest level since September 29 with an intraday high near $106, and WTI reaching around $93
• Gains were pared after President Trump stated that the US and Iran were engaged in productive discussions and that he would not authorize an attack ahead of the November 3 midterm elections
• Iran's foreign minister indicated that a reply to the US response on reopening the Strait of Hormuz would come within days, while the Treasury imposed new sanctions targeting 17 vessels
• Hurricane Isaias has already shut in about 1.3 million barrels per day, nearly two-thirds of the Gulf of Mexico's output, before its scheduled landfall on Friday
• An unverified claim from Iran's Fars news agency stated that tankers were hit by mine explosions in the southern Strait of Hormuz, a report that lacks independent confirmation

Late report: unconfirmed blasts reported in Strait of Hormuz

Late in trading, Iran's Fars news agency reported that a series of large explosions took place in the southern Strait of Hormuz, claiming that tankers it characterized as flouting rules hit mines positioned in the area. The news agency cited military sources through a Fars security and defence correspondent. This claim originates from a single Iranian source and has not been independently verified; details on the number of ships, their identities, casualties, or damage were not immediately available. Market participants are expected to seek confirmation from shipping authorities, maritime security bodies, or other governments before treating the report as credible. If confirmed, the incident would represent a major escalation, as the strait handled roughly one-fifth of global oil and fuel shipments prior to the conflict.

Oil market: strike concerns push prices up, Trump comments pull them down

On Thursday, crude settled roughly 4% higher as fresh concerns about the Middle East war were compounded by hurricane-related supply cuts in the US Gulf. Brent futures ended about $4 higher at near $104 per barrel, while WTI advanced by around 3.5% to approximately $91.50.

Both benchmarks advanced during European and US trading on reports that the US had finalized operational plans for potential strikes on Iran before the November midterms, though no definitive order had been issued. At intraday peaks, each contract rose over $5, pushing Brent to around $106 and WTI to about $93. Brent reached its highest point since September 29.

A sharp pullback occurred after Trump stated that the US was engaged in productive talks with Iran and would not strike before the November 3 elections. This drove Brent down toward $101 and WTI to about $89 at their session lows, but both recovered to close solidly higher.

Iran: diplomatic efforts and economic pressure continue simultaneously

Multiple Middle East news items affected crude throughout Thursday. An adviser to Iran's supreme leader stated that the Strait of Hormuz would stay closed until outstanding matters are settled, pushing oil higher. Subsequently, Foreign Minister Abbas Araqchi said talks are ongoing and Tehran is examining Washington's response to its proposal that would reopen the strait in seven days, with a reply expected within days. Those comments weighed on prices.

Simultaneously, the US Treasury imposed fresh sanctions on individuals, networks, and 17 vessels linked to transporting Iranian crude, oil products, and petrochemicals, intended to intensify economic pressure on Iran. Later, Axios reported that any renewed large-scale US combat operations against Iran would likely involve extensive strikes on energy facilities, infrastructure, and nuclear sites.

Gulf security: Saudi facilities under spotlight

A Houthi spokesperson issued a warning to all workers at Saudi oil facilities, including engineers and technical personnel, advising them not to be present in areas that the group considers targets, a development that lifted crude. France and Saudi Arabia are exploring options that include French military assets to safeguard the Yanbu oil terminal, according to France's armed forces chief. Additionally, Syria is said to be considering military support to Saudi Arabia in its fight against the Houthis, with options from defensive assistance to offensive deployment, as per US and Syrian officials.

October has seen an increase in shipping risks as the conflict enters its eighth month. Last week, attacks on tankers passing through the strait reached the highest level since the war started, despite increased exports from Gulf producers. An energy analyst noted that the rate of Iranian attacks on vessels is at a peak and is likely to grow further.

Hurricane Isaias: Gulf production reduced

Hurricane Isaias is approaching US offshore production zones before its expected landfall on Friday. As of Thursday, Gulf of Mexico producers had shut in about 1.3 million barrels per day, nearly two-thirds of current output, reported the US Marine Minerals Administration. Shell and Chevron stated on Wednesday that they were scaling back offshore activities, while BP evacuated all staff and stopped production at its Na Kika and Thunder Horse platforms.

What to monitor next

Thursday's advance came after a weaker close on Wednesday, when the International Energy Agency decided to speed up stockpile releases and give priority to diesel supplies as governments struggle with record fuel costs. In the near term, market attention centers on Tehran's response to the US proposal, any verification or denial of the Fars report, and the scale and length of Gulf of Mexico production halts after Isaias makes landfall.