Oil rises over $1 as iran crisis disrupts middle east supply

Oil Prices Rise Over $1 Amid Iran Crisis and Middle East Supply Disruptions

Impact of Middle East Tensions on Global Oil Markets

By Arathy Somasekhar

Oil Price Movements and Market Reactions

March 4 (Reuters) - Oil prices rose more than $1 on Wednesday as the U.S.-Israeli war on Iran disrupted Middle East output and halted exports from the region.

Brent rose $1.11, or 1.4%, to $82.53 a barrel, after closing at its highest since January 2025 on Tuesday. U.S. West Texas Intermediate crude rose 79 cents, or 1.1%, to $75.37, after settling at its highest since June.

Military Actions and Regional Output Disruptions

Israeli and U.S. forces struck targets across Iran on Tuesday, prompting Iranian strikes against energy infrastructure in a region that accounts for just under a third of global oil production.

Iraq’s Production Cuts

Iraq, the second-largest crude producer in the Organization of the Petroleum Exporting Countries, has cut output by nearly 1.5 million barrels a day, about half its production, due to storage limits and the lack of an export route, officials told Reuters. They said the country may have to shut its nearly 3 million bpd of output within days if exports do not resume.

Strait of Hormuz Disruptions

Iran has also targeted tankers in the Strait of Hormuz, through which about a fifth of the world's oil and liquefied natural gas flows. Traffic remained effectively closed for a fourth day after Iran attacked five ships.

International Responses and Mitigation Efforts

However, comments from President Donald Trump that the U.S. Navy could begin escorting oil tankers through the Strait of Hormuz if necessary helped keep a lid on crude price gains. 

Trump said he had ordered the U.S. International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf.

But ship owners and analysts questioned if military escorts and insurance support would be enough to restore confidence. 

Alternative Supply Routes and Global Adjustments

Countries and companies have begun seeking alternative routes and supplies. India and Indonesia said they were looking for other energy supplies, while some Chinese refineries were shutting or moving up maintenance plans.

Saudi oil giant Aramco is attempting to reroute some exports via the Red Sea to avoid the Strait of Hormuz, sources said.

U.S. Crude Stockpiles and Market Data

In the United States, crude stocks rose by 5.6 million barrels last week, according to market sources citing American Petroleum Institute figures, well above the 2.3 million barrels analysts projected. Official figures from the U.S. government are expected later on Wednesday. 

(Reporting by Arathy Somasekhar; Editing by Himani Sarkar)