A "slap in the face" action against the IEA? Iran attacks oil tankers, Brent crude back above $100

Source: Huìtōng Network

Huìtōng Finance APP News — On Thursday (March 12) during Asian trading hours, Brent crude oil prices fluctuated upward, rising more than 10% at one point compared to Wednesday’s settlement price. Currently trading around $101 per barrel, the intraday gain is approximately 8.6%. Market panic has resurfaced, mainly due to Iraqi security officials confirming that two foreign oil tankers carrying fuel oil were attacked and set on fire within Iraq’s territorial waters. Preliminary investigations point to an attack by a vessel loaded with explosives from Iran.

This attack is seen as Iran’s direct and forceful response to the International Energy Agency (IEA)’s announcement of a large-scale release of strategic reserves, with the risk of global supply disruptions rising again.

Two Fuel Oil Tankers Attacked and Set on Fire, Preliminary Evidence Points to Explosive Vessel from Iran

Iraqi security officials stated that two foreign oil tankers caught fire after being attacked by unknown assailants within Iraq’s territorial waters. Preliminary investigations indicate the attack was carried out by a vessel loaded with explosives from Iran. The attack caused fuel oil leaks and fires, with rescue operations underway. The specific casualties and damages are still being assessed. This incident occurred amid a near halt in shipping through the Strait of Hormuz, further heightening market concerns over the safety of Gulf oil transportation.

Analysts note that this attack marks a shift from threats to targeted sabotage by Iran’s proxies or direct action, aiming to respond to the IEA’s release and ongoing US-Israeli airstrikes.

IEA Approves Largest Ever Release of 400 Million Barrels to Lower Oil Prices

On Wednesday, the IEA announced that 32 member countries coordinated to release 400 million barrels of strategic petroleum reserves, the largest emergency release in the organization’s history. The US will release 172 million barrels, with Energy Secretary Chris Wright stating shipments could begin as early as next week, expected to take about 120 days to complete. The remaining amount will be shared among other member countries, accounting for roughly one-third of the IEA’s total reserves (1.2 billion barrels).

This move aims to inject significant supply to alleviate panic premiums caused by the Strait of Hormuz disruptions, but market reactions have been lukewarm, with many believing the release can only fill a small part of the gap and cannot fundamentally resolve the supply crisis.

Strategic Reserves Release Seen as Temporary, with Long-term Tightness Due to Strait Disruptions and Middle East Production Cuts

MST Marquee analyst Saul Kavonic stated that while the release of 400 million barrels provides urgently needed supply, it only covers about a quarter of the daily 20 million barrel shortfall in the Strait of Hormuz. Bob McNally, President of Rapidan Energy Group, said, “The market remains in panic mode, filled with emotion, fear, and uncertainty.” The IEA’s action is instead interpreted as a sign of a severe supply crisis, implying that the authorities do not believe the conflict will end soon.

Shipping through the Strait of Hormuz has nearly halted, Middle Eastern oil producers are saturated and forced to cut production, and long-term global supply tightness expectations continue to dominate pricing, with risks of high oil prices persisting.

Trump: US Will Closely Watch the Strait; Intelligence Indicates Iran’s Leadership Not Collapsing in Short Term

Trump stated that the US “will closely monitor the situation in the Strait of Hormuz,” reaffirming that if Iran blocks oil flows, it will face “20 times more severe strikes.” White House intelligence assessments show that Iran’s leadership (including the new Supreme Leader Moojtaaba Khamenei) is not at risk of collapsing in the short term, with regime resilience exceeding expectations.

Trump emphasized that the conflict would “end soon,” but the hardline stance of the Iranian Revolutionary Guard Corps (IRGC) and their refusal to cease fire have undermined confidence in a quick resolution.

Supply Concerns Dominate, Oil Prices Remain Volatile at High Levels

Despite the IEA’s release and Trump’s “verbal intervention” temporarily suppressing prices, the disruptions in the Strait of Hormuz have not eased substantially, and Iran’s attacks on oil tankers have intensified market panic.

Analysts warn that if Iran’s retaliation escalates or proxies expand their actions, oil prices could easily return above $110 per barrel. The outlook of long-term supply tightness continues to dominate, with rising inflation transmission and economic slowdown risks. Investors should be cautious that “release of reserves is a band-aid, not a cure,” and monitor the actual progress of countries’ reserve releases and the latest developments in Strait navigation. Market volatility is expected to remain high.

(Brent Crude Oil daily continuous chart, Source: Yì Huìtōng)

Editor’s Summary

After the IEA announced the largest-ever release of 400 million barrels of strategic reserves, oil prices rose on Thursday instead of falling, with Brent crude surpassing $100, reflecting serious doubts about the effectiveness of the supply relief. The 4 hundred million barrels can only cover about a quarter of the daily 20 million barrel shortfall in the Strait of Hormuz, with logistics delays of 60-90 days, making immediate crisis alleviation difficult.

The attack on two fuel oil tankers in Iraq’s territorial waters, initially pointing to an Iranian explosive vessel, signals Iran’s tough response to the reserve release, with supply disruption risks rising again. Trump’s “closely monitoring the strait” and “quick resolution” statements have failed to convince the market. Iran’s leadership remains intact in the short term, and the IRGC’s refusal to cease fire suggests a prolonged conflict.

While the IEA’s action signals an extreme crisis, it is “treating the symptoms, not the root cause,” and oil prices remain high, with ongoing global inflation and economic pressures. Investors should beware of escalation from Iran’s retaliation, and keep an eye on Strait navigation and G7 coordination.

As of 11:35 Beijing time, Brent crude oil is quoted at $100.85 per barrel.