Brent hits $96 as dual chokepoint threats outweigh US stock build
Oil prices surged to six-week highs as US strikes on Iran and Houthi attacks in the Red Sea triggered a rapid build in geopolitical risk premiums, overshadowing a surprise increase in US crude inventories.
Brent crude futures rose $1.93, or 2%, to settle at $96 per barrel on Thursday, the highest level since June 8. US West Texas Intermediate gained $1.44 to $88.27, extending a prior session rally. The price jump followed a 12th consecutive night of US military strikes on Iran and attacks on commercial shipping by Yemen's Houthi rebels.
The simultaneous threats to global energy transit routes are driving the market's reaction. Iran's Revolutionary Guards claimed a tanker caught fire on a mined route south of the Strait of Hormuz and declared the waterway "completely closed." Separately, Houthi forces announced a naval blockade of Saudi Arabia, claiming strikes on two Saudi tankers in the Red Sea, including the vessel Encelia.
Traders are pricing in severe potential disruptions, even though physical supply has so far remained intact. Houthi claims that roughly 10 vessels reversed course could not be independently verified. However, the concentration of risks across the Strait of Hormuz, the Red Sea, and the Black Sea is forcing market participants to hedge against worst-case scenarios.
This geopolitical premium is entirely overriding bearish fundamental data from the United States. The Energy Information Administration reported a build of 2 million barrels in US crude inventories last week. Analysts had instead expected a drawdown of 1.1 million barrels, as refinery activity slowed and imports climbed.
The shift in market structure reflects the sudden supply anxiety. “Backwardation has deepened in tandem, with the prompt-to-second-month spread widening to $3, reflecting near-term availability concerns outweighing longer-dated fundamentals,” said Kaynat Chainwala, AVP Commodity Research at Kotak Securities. “With Hormuz, the Red Sea and the Black Sea all flashing disruption signals simultaneously, physical supply has not yet been meaningfully curtailed, but the risk premium is building quickly. Any fresh escalation across these chokepoints could pave the way for $100 Brent in the sessions ahead.”
Technical indicators suggest the upward momentum will likely persist. “US Oil is trading with a positive bias above the $85 mark, supported by ongoing geopolitical tensions,” said Ponmudi R, CEO of Enrich Money. “Immediate resistance is placed at $86.5–$87, followed by the $88–$88.5 zone. On the downside, immediate support is seen at $84.5–$84, and a break below this level could drag prices toward the $82 mark. Overall, the near-term outlook remains positive, with geopolitical developments likely to dictate the next directional move.”
