Oil rebounds above $100 as market counts cost of attacks on energy

Iran's targeting of Middle East energy has driven oil prices back above the $100 a barrel level again, with market experts expressing increased alarm over the prospects for long term damage to the industry.

Brent crude costs briefly hit $101 overnight after it emerged that key infrastructure in Gulf nations had been damaged or destroyed - both on land and at sea.

The incident that stood out was an Iranian attack on two fuel tankers in Iraqi waters, off Basra, in which explosive-laden boats were used.

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Iraq responded by suspending operations at all its oil ports. Further attacks have been reported more widely on Thursday, with Dubai and Bahrain affected.

Market analysts suggested that the clear tactic to target energy by the Iranian regime risks further long term damage to output, exacerbating efforts to restore oil and gas flows to normal once the conflict ends.

Prices came down from war-led peaks of $118 on Monday when it emerged that the International Energy Agency (IEA) was planning to coordinate a record release of strategic oil reserves to partly compensate the market for lost flows due to the effective closure of the key Strait of Hormuz shipping route.

That has deprived the world of a fifth of its oil and natural gas deliveries.

Confirmation on Wednesday that the stored oil, to be released by more than 30 nations, would be gradually introduced did not move values down further as it became clear that attacks were intensifying.

In its regular monthly market report, released on Thursday morning, the IEA warned: "The war in the Middle East is creating the largest supply disruption in the history of the global oil market."

It pointed to an estimated hit to global supply of eight million barrels of oil per day this month, adding that 10% of world production had been lost due to shutdowns.

Brent was trading just below the $100 mark on Thursday afternoon - threatening further upwards pressure to fuel prices at UK forecourts where costs for diesel have leapt 9%, on average, since the war began.

UK wholesale gas costs stood more than 4% higher on the day - up 74% this month.

The shifts currently only place at risk the cost of new fixed rate deals for households as the energy price cap adjustment for April-June was announced before hostilities in the Middle East began.

These rising prices however risk a renewed spike in inflation as costs are passed on down supply chains, affecting everything from manufactured goods to even services.

It could result in higher borrowing costs being imposed by the Bank of England which would be anxious to help stop any elevated period of price growth becoming engrained in the economy.

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Market analysts have consistently warned that the duration of disruption to the flows of oil and gas will be crucial in determining the price outlook.

The trouble now, they say, is that recovery of volumes will take longer because of the growing extent of the damage to infrastructure and there are insufficient stocks for a second 400 million barrel bailout.

Iran's attacks fly in the face of claims by Donald Trump that US military objectives are almost complete and that the war is almost over.

Neil Wilson, Saxo's UK investor strategist, said of the situation: "The problem as it were for the IEA is that it's going to be hard to do much more... but it's ok because Trump said 'we've won'.

"Markets are going to increasingly discount remarks like these the longer the shooting continues," he added.

(c) Sky News 2026: Oil rebounds above $100 as market counts cost of attacks on energy