Oil topped $100 again after a new wave of tanker attacks, overshadowing a record reserve release

• Oil surged back above $100 after tanker attacks rattled Middle East supply routes.
• Iran war tensions shook markets even after the IEA announced a 400 million barrel reserve release.
• Traders warn disruptions in the Strait of Hormuz could push prices even higher.

Oil has surged back above $100 a barrel after two fuel tankers were attacked in Iraqi waters, escalating tensions in an already fragile oil market.

Brent crude oil futures were 10% higher at around $101 barrel at 11:37 p.m. on Wednesday. US West Texas Intermediate futures were 9% higher, around $95 a barrel, reflecting fears of escalating supply disruptions amid fast-moving developments in the war.

The sharp gains came after the International Energy Agency said Wednesday that it would release 400 million barrels from strategic reserves to address disruptions stemming from the Iran conflict — the largest coordinated release in the agency's history.

"This appears to mark a direct and forceful Iranian response to the IEA's overnight announcement of a massive strategic reserve release aimed at cooling runaway prices," wrote Tony Sycamore, a market analyst at IG, on X.

Earlier, Iran warned of even higher oil prices as it remains defiant.

"Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised," Ebrahim Zolfaqari, a spokesperson for Iran's military command, said in comments addressed to Washington, according to Reuters.

The latest escalation injects fresh uncertainty into global energy supplies, as analysts were already questioning how much the IEA's move would actually help the market.

Some analysts cautioned that the move is unlikely to offset the millions of barrels per day that are no longer flowing through the Strait of Hormuz, a critical waterway that handles about 20% of the world's oil shipments.

Beyond questions about how quickly the IEA's reserves will reach the market, there are also doubts about whether the release will be enough to stabilize prices amid prolonged disruptions in the Strait of Hormuz.

"The only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz. Failing to do so means that the market highs are still ahead of us," wrote ING commodity strategists in a Wednesday note.

Prices first breached the $100-a-barrel level and neared $120 on Sunday amid concerns that Iran could move to disrupt traffic through the Strait of Hormuz. There are few viable alternative routes for the volumes that typically pass through the strait.

Analysts say the oil market remains highly sensitive to geopolitical headlines, with traders closely watching fast-changing developments in the region.

But there's a tipping point. Historically, when crude climbs into the $110 to $120 range, demand begins to soften as elevated fuel costs drag on broader economic activity, wrote Ole Hansen, the head of commodity strategy at Saxo Bank, on Tuesday.

"Sustained prices at these levels carry an increased economic risk, at a time where global economic activity already remains challenged by geo-political shifts and tariff-related obstructions to trade," Hansen added.