By Our Energy Desk
LONDON — Global oil benchmarks retreated slightly from their intraday highs on Thursday as market participants took profits following a dramatic surge fueled by escalating military tensions in the Middle East.
Brent crude, the international benchmark, opened the session at $116 per barrel—its highest level since the outbreak of hostilities on February 28. However, it has since eased in mid-day trading to sit just below the $116 mark. Similarly, the US benchmark, West Texas Intermediate (WTI), which opened at $97.17, was recently trading at $96.82.
The cooling of prices suggests a temporary “breather” for a market that has been in a state of near-perpetual rally for three weeks. The initial spike to $116 was triggered by overnight reports of fresh strikes on energy infrastructure near the Strait of Hormuz, a critical chokepoint through which approximately 20% of the world’s oil transit flows.
Analysts suggest the slight retreat in WTI is partly due to an unexpected build in US crude inventories. Data released earlier this week showed a rise of 6.2 million barrels in US stocks, significantly higher than analyst forecasts, providing a modest cushion against the loss of Middle Eastern barrels.
The current price volatility is the direct result of a rapidly deteriorating security situation in the Persian Gulf. Since late February, a series of escalations between regional powers has led to:
Supply Disruptions: The IEA estimates that global oil supply could plunge by as much as 8 million barrels per day (mb/d) this month due to curtailments in Iraq, Saudi Arabia, and the UAE.
Shipping Bottlenecks: Tanker movements through the Strait of Hormuz have slowed to a trickle, with insurance premiums for vessels in the region reaching record highs.
OPEC+ Stance: Despite the price surge, the OPEC+ alliance has maintained its policy of production restraint through March, opting not to release additional barrels until their next scheduled meeting on April 5.
“While we see a minor softening in prices this afternoon, the floor remains high,” said one senior energy strategist. “At $116, the market is pricing in a ‘war premium’ that won’t dissipate until there is a clear de-escalation or a significant release of strategic reserves.”
