Brent Crude Surges Back Above $100 as Gulf Strikes Escalate

Brent crude surged back above $100 per barrel during Asia trading on Thursday after a night of escalating strikes across the Gulf — hitting ships, oil terminals and military infrastructure. The IEA’s record 400 million barrel reserve release, announced hours earlier, has so far failed to hold prices below triple digits as fresh supply disruption overwhelms the intervention.

The oil market’s brief retreat below $100 is over.

Brent crude surged back through the triple-digit threshold during Asian trading overnight, driven by a wave of strikes across the Gulf that hit shipping, oil terminals and military infrastructure simultaneously — a multi-front escalation that has rattled markets and investors alike. US and European futures pushed lower. Asian stocks fell. And the $400 million barrel emergency reserve release the IEA announced hours earlier — the largest in the agency’s history — has so far proved insufficient to hold prices down.

The message from markets is unambiguous: the physical disruption to Gulf energy infrastructure is now outrunning the policy response.

A Night of Escalation

The overnight developments represent a significant widening of the conflict’s footprint. Three more vessels were struck in the Gulf, extending a pattern of attacks on commercial shipping that has grounded hundreds of flights, stranded thousands of passengers and forced shipping companies to reroute or suspend Gulf operations entirely.

Iraq’s decision to close all its oil terminals overnight — following strikes on two tankers off the coast of Basra, including a US-owned vessel — represents a significant new escalation. Iraq exports approximately 3.3 million barrels per day, making it OPEC’s second-largest producer. Even a temporary closure of its terminals removes a meaningful volume of supply from an already critically constrained market.

Elsewhere, an Italian military base in Erbil was struck by missile fire. Israel and Hizbollah exchanged heavy fire across the Lebanese border. And a fuel storage facility in Bahrain was set alight — a strike on Gulf infrastructure that underlines how broadly the conflict’s reach is now extending beyond the immediate Iran theatre.

The IEA’s Record Intervention

Against this backdrop, the International Energy Agency’s decision to release 400 million barrels of crude and refined fuels onto the market — with the United States contributing 172 million barrels from its Strategic Petroleum Reserve — was designed to send both a physical and psychological signal to markets.

The IEA’s intervention is the largest emergency reserve release in the agency’s 50-year history, dwarfing the 60 million barrel release triggered by Russia’s invasion of Ukraine in 2022. The scale reflects the severity of a disruption that has taken approximately 20 per cent of global oil supply offline — the largest supply shock in recorded history.

The problem is that 400 million barrels, while substantial, represents roughly four days of global consumption. With the Strait of Hormuz remaining effectively closed and fresh strikes adding to the disruption overnight, markets are looking past the reserve release and pricing the duration of the conflict instead.

What the Markets Are Telling Us

The return to triple-digit oil prices carries immediate consequences across the global economy. Central banks meeting next week were already facing a stagflation dilemma — weak growth on one side, resurging inflation on the other. Brent above $100 hardens that dilemma considerably.

The Bank of England, which had been widely expected to cut rates before the Iran war broke out, now faces a deeply uncomfortable set of choices. So do the Federal Reserve and the ECB. Rate cuts designed to support weakening economies risk inflaming an energy-driven inflation surge that is far from over.

For investors, the message is equally sobering. The brief period of optimism that accompanied oil’s retreat from its $119 peak appears to have been premature. Until there is a credible path to reopening the Strait of Hormuz, the market will keep pricing the worst.

FAQs

Why did Brent crude go back above $100 despite the IEA reserve release? Fresh overnight strikes on Gulf shipping and Iraq’s decision to close all its oil terminals added new supply disruption that outweighed the market impact of the IEA’s 400 million barrel release. Reserve releases buy time — they cannot substitute for physical supply flows indefinitely.

What does Iraq closing its oil terminals mean for global supply? Iraq exports roughly 3.3 million barrels per day as OPEC’s second-largest producer. Even a short-term terminal closure removes significant supply from an already critically disrupted market, putting additional upward pressure on prices.

When will oil prices stabilise? The EIA’s latest forecast projects Brent remaining above $95 for the next two months before falling below $80 in Q3 2026 — but that forecast is entirely dependent on assumptions about how quickly Strait of Hormuz transit resumes. Further escalation could push prices significantly higher before any stabilisation occurs.