Oil surges above $104 as Iran tensions, Hurricane Isaias threaten supply

Oil prices rallied sharply on Thursday, driven by a confluence of supply threats from mounting U.S.-Iran hostilities and a hurricane bearing down on the Gulf Coast, where more than half of the nation’s refining capacity is located.

Brent crude rose 4.1% to $104.32 a barrel, according to the German Press Agency (dpa) as reported by Malaymail. OilPrice.com put Brent at $105.02, up 4.81% from Wednesday’s close, while West Texas Intermediate traded at $92.69 a barrel, a 5% gain. The move reversed losses from the previous session after the International Energy Agency accelerated plans to release oil stocks.

**Iran tensions escalate**

The price surge followed reports of increasingly frequent Iranian attacks on tankers in the Strait of Hormuz. The Economic Collapse Blog, citing NBC News and Axios, reported that President Donald Trump is considering a new wave of airstrikes on Iran, with discussions including possible “massive bombing” of Iranian energy, infrastructure and nuclear targets. No final decision has been made, according to the report. The Atlantic reported separately that the White House had asked the Pentagon to develop options for striking Iran before the midterm elections, Malaymail reported.

Iran has responded with threats of pre-emptive action. The Economic Collapse Blog quoted Iran’s army spokesman Brigadier General Mohammad Akrami-Nia as telling state-run IRNA that “should circumstances require it, we will conduct pre-emptive operations down the line in order to prevent the enemy from committing any act of aggression or intrusion.”

Tanker traffic through the Strait of Hormuz has dropped sharply. According to analytics firm Kpler, cited by both OilPrice.com and Malaymail, just seven commodity vessels passed through the waterway on Tuesday, the lowest since July 23, after attacks reached their highest level last week since the start of the U.S.-Israeli conflict with Iran. “In the past, such attacks have resulted in a reduction in shipments from the Persian Gulf. This time around, producers appear to be willing to take the risk of their vessels being damaged, as there is no alternative way to get their oil to international markets,” ANZ analyst Daniel Hynes said, as reported by OilPrice.com.

Separately, the U.S. State Department urged citizens to exercise heightened vigilance after Houthi strikes on two Saudi airports killed three people and injured 36, Malaymail reported.

**Hurricane threatens Gulf refining**

Tropical Storm Isaias strengthened into a hurricane and is expected to make landfall along the Gulf Coast late Friday, according to the National Hurricane Center. The Economic Collapse Blog reported landfall is expected somewhere between eastern Louisiana and the western Florida Panhandle. Isaias is the first hurricane of the 2026 Atlantic season and the first to strike the U.S. since Hurricane Milton in 2024.

Operators have begun curbing production and evacuating personnel. In the Gulf of Mexico, about 500,000 barrels per day — 25% of offshore production — have been shut in, the Economic Collapse Blog reported. The Bureau of Safety and Environmental Enforcement said Saturday that the Louisiana Offshore Oil Port, the largest privately owned crude terminal, is also threatened, according to a CBS News Facebook post, though the timing of that statement relative to the storm is unclear.

The Gulf Coast accounts for more than 50% of U.S. crude oil refining capacity, the Economic Collapse Blog noted, citing the U.S. Energy Information Administration. Texas and Louisiana alone make up 49% of the nation’s refining capacity. Any damage to refineries could tighten fuel supplies and push prices higher.

**Broader market impact**

The oil rally pushed bond yields higher. The 10-year Treasury yield jumped to 5.35%, reversing a drop seen late Wednesday, the Economic Collapse Blog reported. Benchmark diesel futures rose 4.5% in European trading, while heating oil, a proxy for jet fuel, gained more than 4%.

Rising crude prices are feeding into transport costs. The Economic Collapse Blog gave an example: shipping a load of lettuce from Salinas, California, to New York now costs about 50% more than a year ago, with diesel for that trip running around $10,000.

The IEA’s planned release of 100 million barrels of crude and fuels, agreed by G7 nations last week, did little to calm markets. OilPrice.com noted that the release is part of a larger plan announced in March for 400 million barrels and has largely been priced in.