Oil surges above $83 on Kuwait tanker attack as Mideast risks deepen
Strait of Hormuz disruption fears escalate following vessel strikes in Persian Gulf
Global oil prices surged more than $2 per barrel on Thursday after a tanker was attacked off the coast of Kuwait, raising fresh concerns about energy security as Middle East tensions escalate. ICE Brent crude jumped $2.02 to $83.42 per barrel, while NYMEX crude climbed $2.28 to $76.94, as investors priced in heightened risks to shipping through one of the world's most critical energy chokepoints.
The United Kingdom Maritime Trade Operations reported an explosion and water intake on a vessel near Kuwait, with authorities issuing warnings to nearby shipping. The attack follows a series of maritime incidents in the Persian Gulf region, with the UK Maritime Agency documenting a tanker explosion and oil spill off Kuwait. The incidents have prompted some major shipping operators to suspend services in the region as safety assessments continue.
The Strait of Hormuz, which separates Iran from the Arabian Peninsula and handles approximately 21 million barrels of oil daily, remains the focal point of supply concerns. Iran's Revolutionary Guards have asserted "complete control" over the strategic waterway, while China's Cosco Shipping has suspended Gulf services as the security situation deteriorates. The vessel targeting off Kuwait marks a widening of attacks in a region responsible for nearly one-third of global seaborne oil trade.
The escalation comes as the International Monetary Fund warned that Middle East conflict poses significant risks to the global economy. Recent Bloomberg coverage noted the IMF's assessment that the Mideast war will test world economy, with policymakers bracing for additional supply shocks that could complicate inflation management across major economies.
India, which relies heavily on Middle Eastern oil imports, has already begun implementing measures to protect its economy from supply disruptions. Bloomberg reported that India is moving to shield its economy as Iran-related tensions expose vulnerabilities in energy supply chains. The country's central bank intervened to support the rupee after it hit record lows amid the risk-off sentiment.
Meanwhile, some Asian economies may have more cushion against the oil-driven price shock. Thailand's consumer price index fell 0.88% in February, well below expectations of a 0.49% decline, suggesting muted inflation could help absorb oil price pressures in certain markets.
The broader energy complex is facing renewed volatility as market participants assess the duration and intensity of the conflict. Shipping insurance costs for Persian Gulf transits have already increased significantly, with some vessels diverting to longer, more expensive routes around Africa to avoid the risk zone.
Analysts warn that sustained disruptions at the Strait of Hormuz could push oil prices substantially higher, particularly if the conflict draws in additional regional actors. The situation represents a critical test for global energy markets already grappling with reduced spare production capacity and uncertain demand outlooks amid broader economic uncertainties.