Oil prices surged again on Thursday, October 8, with Brent crude climbing above $105 a barrel after a jump of roughly 5 percent. US benchmark West Texas Intermediate rose about 5.1 percent to around $92.75. The rally erased a dip earlier in the week, when signs of recovering Middle East exports and a G7 agreement to tap emergency stockpiles had briefly calmed traders.
What sparked the jump
The trigger was a report in US media that the Pentagon had instructed Central Command to complete preparations for a possible resumption of major combat operations against Iran. No date has been set, and potential targets reportedly include energy infrastructure, other infrastructure and nuclear sites. The United States and Iran have still not reached a deal to end the war that began in February, and Iranian forces have stepped up attacks on tankers in the Strait of Hormuz.
Why supply looks so fragile
- Stockpiles are thin. Senior industry officials have warned that global reserves are running dangerously low. Saudi Aramco has said rebuilding them could take two years.
- Emergency releases are speeding up. On October 7, the International Energy Agency said its members backed accelerating stock releases first pledged in March, prioritising diesel where possible.
- Weather adds risk. US producers shut in more than 500,000 barrels a day of Gulf of Mexico output ahead of Hurricane Isaias.
How markets reacted
Stocks fell on both sides of the Atlantic. At the European open, Germany’s DAX dropped 0.76 percent, London’s FTSE 100 fell 0.75 percent and the Euro Stoxx 50 lost about 1 percent. Asian markets in Tokyo, Hong Kong and Shanghai also declined. The previous session, the S&P 500 had slipped 0.2 percent after setting a record high.
Higher oil prices also lifted bond yields as investors priced in more inflation. The US 10-year yield traded around 5.32 percent, near a multi-decade high, while gold held above $4,100 an ounce.
What it means at the pump and beyond
Crude price swings typically reach petrol and diesel prices within one to two weeks. Diesel is the bigger worry for many economies because it powers trucks, farm machinery and shipping, which means higher costs eventually show up in food and goods prices. Airlines, already paying sharply more for jet fuel this year, face further pressure heading into the winter travel season.
What to watch
- Any decision in Washington on renewed strikes, and Tehran’s response at sea.
- Weekly inventory data and the pace of IEA-coordinated stock releases.
- Gulf of Mexico production as hurricane season winds down.
For the security picture behind the price moves, read our report on the Strait of Hormuz, and follow markets daily in our Finance section.