- Oil prices surged as Middle East conflict raised supply risks and shipping disruptions increased
- US WTI crude topped $75 a barrel, marking an 11% gain over two days, the largest in four years
- President Trump said US might insure tankers and provide naval escorts through Strait of Hormuz
Oil prices continued their sharp rally as escalating conflict in the Middle East and mounting disruptions to shipping through the Strait of Hormuz pushed traders to reassess supply risks.
US benchmark West Texas Intermediate climbed above $75 a barrel, extending a two-day surge of about 11% — the biggest gain in four years. Brent crude settled near $81 a barrel, reflecting growing concerns that the conflict could disrupt global energy flows.
The latest boost to oil prices came after US President Donald Trump said Washington was exploring measures to safeguard tanker traffic through the Strait of Hormuz — a critical corridor for global oil shipments.
US Weighs Insurance, Naval Escorts
Trump said the US International Development Finance Corporation (DFC) could provide insurance to vessels transiting the waterway and that the US Navy could offer escorts if required. The proposal is aimed at reassuring shipping companies and maintaining the flow of energy exports amid heightened security risks.
“No matter what, the United States will ensure the free flow of energy to the world,” Trump wrote on social media, though details of how the insurance program would operate remain unclear. The DFC typically works to mobilize private investment in developing economies and reduce investment risk.
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Shipping Risks Rise in Key Oil Chokepoint
The Strait of Hormuz — a narrow passage connecting the Persian Gulf to the Indian Ocean — carries roughly one-fifth of global oil and gas supplies. Since hostilities erupted last weekend, tanker traffic through the route has slowed sharply as shipowners weigh security risks.
Iran's Islamic Revolutionary Guard Corps warned vessels navigating the waterway that they could face missile or drone attacks under current wartime conditions. In a statement cited by Iran's Fars news agency, the group said more than 10 tankers had already been targeted after ignoring earlier warnings.
The threats have heightened fears of prolonged disruptions to the global energy trade.
Supply Disruptions Add to Anxiety
Beyond shipping concerns, production disruptions are also emerging. Iraq — the second-largest producer in the OPEC alliance — has begun shutting down operations at key fields including Rumaila, its largest oil field, and the West Qurna 2 project, according to people familiar with the matter. If the shutdowns are completed, they could halt a majority of the country's output.
The broader regional conflict between the US, Israel and Iran has already forced the closure of major energy infrastructure, including a refinery and a gas export facility. The developments have intensified fears that the fighting could trigger a wider energy supply shock.
Hostilities showed little sign of easing. The Israel Defense Forces said it had launched a “broad wave of strikes” targeting Iranian missile launch sites, air defense systems and related infrastructure.
Away from geopolitical tensions, supply data from the US offered a potential offset to the rally. An industry report showed American crude stockpiles rose by 5.7 million barrels last week, following an increase of nearly 16 million barrels the week before. Official government data were due later Wednesday.
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