SINGAPORE: Oil prices rose on Thursday, with benchmark Brent rising to its highest in more than a week, after Iran attacked energy facilities across the Middle East following Israel's strike on its South Pars gas field, a major escalation in the war.
Brent futures were up $6.97, or 6.5%, at $114.35 a barrel by 0740 GMT, after climbing more than $7 to the highest since March 9.
U.S. West Texas Intermediate crude rose $1.04, or 1.1%, to $97.36 a barrel, after a rise of more than $3 to $100.02 a barrel.
Brent closed up 3.8% on Wednesday, while WTI settled nearly flat. WTI has been trading at its widest discount to Brent in 11 years due to releases from U.S. strategic reserves and higher freight costs, while renewed attacks on Middle Eastern energy facilities boosted support for Brent.
"Escalation in the Middle East, precise attacks on oil infrastructure, and the death of Iranian leadership all point to a prolonged disruption in oil supplies," Phillip Nova analyst Priyanka Sachdeva said in a note.
"Adding fuel to the fire, the Federal Reserve served 'steady rates' with a hawkish narrative, pointing to the economic concerns that follow a war."
U.S. FED HOLDS INTEREST RATES STEADY
The U.S. central bank held interest rates steady on Wednesday, projecting higher inflation as policymakers take stock of the impact of the U.S.-Israel war with Iran.
On Wednesday, QatarEnergy said Iranian missile attacks on Ras Laffan, the site of Qatar's core LNG processing operations, caused "extensive damage" to its energy hub.
Saudi Arabia said it intercepted and destroyed four ballistic missiles launched on Wednesday toward Riyadh and an attempted drone attack on a gas facility.
Saudi Aramco's SAMREF refinery in the Red Sea port of Yanbu was also targeted in an aerial attack on Thursday.
Kuwait Petroleum Corporation said an operational unit at its Mina al-Ahmadi refinery was hit by a drone, igniting a limited fire.
Iran issued evacuation warnings before its attacks for several oil facilities across Saudi Arabia, the UAE and Qatar, as it prepared to retaliate for strikes on its own energy infrastructure in South Pars and Asaluyeh.
South Pars is the Iranian sector of the world's largest natural gas deposit, which Iran shares with U.S. ally Qatar on the other side of the Gulf.
Israel carried out the South Pars gas field attack, but the United States and Qatar were not involved, President Donald Trump said late on Wednesday.
He added that Israel would not further attack Iranian facilities in South Pars unless Iran attacked Qatar, and warned that the United States would respond if Iran acted against Doha.
Oil prices are set to stay supported as Iran's fresh strikes on Middle Eastern energy infrastructure worsen regional tension, with no sign of de-escalation in the conflict or a near-term reopening of the Strait of Hormuz, said Tina Teng, market strategist at Moomoo ANZ.
Earlier, Reuters reported that Trump's administration is considering deploying thousands of U.S. troops to reinforce its operation in the Middle East, in preparation for the next steps of its campaign against Iran. - Reuters
