Brent crude rose 5% to $105.30 a barrel on Thursday, October 8, as oil markets weighed heightened Middle East tensions and production cuts prompted by Hurricane Isaias in the Gulf of Mexico. The price was an intraday snapshot, not a reported closing level.
Market attention turned to a report that the White House had asked the Pentagon to develop options for possible strikes on Iranian targets before the November 3 midterm elections. The report, published by The Atlantic and cited by The Guardian, relied on two unnamed administration officials. It said the targets and scale had not been settled, and that no decision to carry out strikes had been made.
Shipping attacks add to supply concerns
Oil prices also drew support from increased attacks on shipping in the Gulf and the Strait of Hormuz, according to Reuters. A tanker north of Qatar was hit by projectiles on Wednesday, Reuters reported, citing the UK Maritime Trade Operations agency. The available account does not identify who was responsible.
The tanker incident added to market concerns about the security of regional oil flows. The reports linked those concerns to the price rise, but did not quantify how much of the move was attributable to shipping risks or the report about possible Iran strike planning.
Hurricane cuts Gulf production
Hurricane Isaias also curtailed oil and gas production in the Gulf of Mexico. Shell and Chevron said on Wednesday they were reducing Gulf operations, Reuters reported.
Reuters, citing the Marine Minerals Administration, said about 25.08% of Gulf oil production and 16.37% of natural gas production had been shut in as of Wednesday. The Associated Press separately reported that roughly a quarter of the region’s oil output, about 511,000 barrels a day, was temporarily halted.
The hurricane-related cuts formed part of the supply picture facing traders as tensions and shipping risks weighed on the market. The reports do not establish how long the production interruptions would last.
Prices shifted during Thursday trading
Reuters’ early Thursday snapshot put Brent futures at $102.28 a barrel, up 2.28%, at 04:27 GMT. A later report from The Guardian recorded Brent at $105.30, up 5%. The figures reflect different observations during the trading day, rather than a confirmed closing price.
Reuters also cited a larger-than-expected decline in US crude inventories as another factor supporting prices. The supplied reporting does not provide the inventory figure or quantify its contribution to the rise.