Iranian attacks on two tankers in the Persian Gulf and Strait of Hormuz on Thursday and threats to “destroy” the world economy have overshadowed international moves to reduce oil prices.
Iran has been using unmanned surface vessels laden with explosives, otherwise known as ‘sea drones’, to strike ships in the vital oil and gas sea lane, according to maritime authorities and analysts who spoke to Reuters.
The attacks caused oil prices to soar above $100 – and most Asian markets to sink – on Thursday, despite news that the International Energy Agency would release a record amount of strategic crude.
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In a monthly report today, the IEA said: “The war in the Middle East is creating the largest supply disruption in the history of the global oil market.”
On Wednesday, the IEA said member states had agreed to release 400 million barrels of oil from their reserves – their largest ever.
But the move, which seeks to ease anxiety about a blockade of energy supplies that flow from multiple states in the Middle East through the Strait of Hormuz, had only a limited impact on global prices.
Iran appears to be stepping up attempts to disrupt supplies across the region. Two tankers in Iraqi waters were struck on Thursday, despite Baghdad having already said it was cutting output because of the crisis.
Kuwait and Saudi Arabia have made similar announcements, while Bahrain said Iran had carried out an attack on fuel tanks in the country.
Saudi Arabia said it had intercepted drones headed to Shaybah oil field, and drones struck fuel tanks at Oman’s Salalah port, where operations were subsequently suspended, AFP reported.
The UK maritime agency said in an alert on Thursday that a container ship near the United Arab Emirates was hit by an “unknown projectile”.
Sea drones, which Ukraine has used in its war against Russia, have also been utilised by Houthi rebels from Yemen in the Red Sea, as experts say they are able to carry more explosives than aerial drones and have the capacity to immobilize commercial vessels.
Iran is also believed to have laid a few dozen mines in the strait, before at least 16 mine-laying vessels were taken out by the US, according to reports by CNN, Al Jazeera and Reuters, which cited US intelligence officials.
The latest attacks caused Brent crude to rise to a high of $101.59 per barrel on Thursday, while WTI spiked at just short of $96. Earlier this week, the two benchmarks shot up by as much as 30% to a peak of nearly $120.
Both pared gains later, but with no sign of hostilities ending anytime soon, analysts say $90-$100 a barrel could be the new normal for a while. And the Commonwealth Bank of Australia has warned that prices could hit US$150 if the crisis persists for several months.
Iran has published new footage showing moments when the US-owned oil tanker in the Persian Gulf was struck with a guided drone-boat. https://t.co/pDPjCGKTpN pic.twitter.com/886ifbihQG
— Arya Yadeghaar (@AryJeay) March 12, 2026
IRGC threatens long war of attrition
Iran said it was ready for a long war of attrition that would “destroy” the world economy, threatening any vessels from the United States or its allies.
The Revolutionary Guards threatened on Wednesday to strike “economic centres and banks” linked to US and Israeli interests.
The two “must consider the possibility that they will be engaged in a long-term war of attrition that will destroy the entire American economy and the world economy”, Ali Fadavi, an adviser to the Guards’ commander-in-chief, told state television.
Iran’s Tasnim news agency also published a list of potential tech targets, including the offices of Amazon, Google, Microsoft and Nvidia in Gulf countries and Israel.
Saudi Arabia, the world’s largest oil exporter, is likely to have been hit hard by the conflict because the bulk of the 7 million barrels it used to export every day via the Strait of Hormuz has been greatly diminished.
The East-West pipeline built across the country to the Red Sea port of Yanbu has the capacity to handle 5 million bpd, but that is less than half of the crude that Saudi produces every day, and it could also be a target in the weeks ahead.
If the blockade drags on for more than a few weeks, China is also likely to take a significant economic blow, despite having diversified its sources of crude.
Iran has sent China close to 12 million barrels of oil through the Strait since the war began, according to a report by CNBC, which cited a co-founder of TankerTrackers.com. But that is likely still well short of the levels it normally receives, energy monitors have said.
Fertiliser supplies, airlines also hit
Analysts have also said a prolonged disruption to shipping through the Strait – which carries roughly a third of the fertiliser used in global food production – would deliver a severe shock to farmers in China, plus a range of other countries in Asia and Europe.
Another sector badly hit already is aviation. Many airlines have had to rethink flights through the Middle East, while the rising cost of fuel adds to their bottom line.
Air New Zealand said Thursday it would cut 1,100 flights over the next two months, while Hong Kong carrier Cathay Pacific unveiled new fuel surcharges for most routes that are roughly double the existing ones.
Wellington also said on Thursday it was considering using decades-old laws restricting vehicle use if fuel supplies dwindle.
Australian officials have announced they will adjust fuel quality standards to allow higher sulphur levels for around two months in a move that will release 100 million litres into the domestic supply.
Asian markets down
The surge in oil prices has stoked fears about another spike in inflation and possible interest rate hikes, after central banks had been contemplating cuts just last month.
That has weighed on equities, which resumed their retreat on Thursday.
Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Mumbai, Wellington, Singapore, Taipei, Manila and Jakarta were all deep in the red. London, Paris and Frankfurt also dropped at the open.
“When the geopolitical fire alarm is still ringing around the Strait of Hormuz, dumping barrels from emergency stockpiles is less a solution than a symbolic gesture,” Stephen Innes at SPI Asset Management wrote.
“It might dampen volatility for a few hours, but it cannot change the geometry of risk when the world’s most important shipping artery is under threat.
“In trading desk language, the IEA release is the equivalent of pointing a garden hose at a refinery blaze.”
Still, Trump reiterated his insistence that the strikes had already practically defeated Iran.
“They are pretty much at the end of the line,” he told reporters, after delivering a speech to supporters in which he declared: “We’ve won… we won – in the first hour it was over.”
Israel’s military, however, signalled the campaign was far from finished, and that it still had “a broad bank of targets.”
Key figures at around 0815 GMT
West Texas Intermediate: UP 4.0% at $90.72 per barrel
Brent North Sea Crude: UP 4.4% at $96.04 per barrel
Tokyo – Nikkei 225: DOWN 1.0% at 54,452.96 (close)
Hong Kong – Hang Seng Index: DOWN 0.7% at 25,716.76 (close)
Shanghai – Composite: DOWN 0.1% at 4,129.10 (close)
London – FTSE 100: DOWN 0.6% at 10,296.02
Dollar/yen: DOWN at 158.89 yen from 158.92 yen
Jim Pollard with Agence France-Presse
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