Oil prices soar 6% to highest since 2024 as Middle East conflict widens

NEW YORK, March 3 (Reuters) – Oil prices soared about 6% to their highest since 2024 on Tuesday, rising for a third session as the U.S.-Israel war against Iran widened, disrupting energy shipments from the Middle East and stoking fears of a prolonged conflict.

Brent futures rose $4.70, or 6.1%, to $82.44 a barrel at 12:38 p.m. EST (1738 GMT). U.S. West Texas Intermediate rose $4.43, or 6.2%, to $75.66. Brent was on track for its highest close since July 2024 and WTI for its highest since January 2025.

The war has widened. Iraq, No. 2 crude producer in the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia, has cut production by nearly 1.5 million barrels a day (bpd), and the cuts could more than double within days as the country runs out of storage space for crude it cannot export due to the crisis.

“Iran’s retaliation has been broader than its previous, mostly symbolic measures, and its approach has resulted in several regional flashpoints posing real risk to supply,” analysts at Standard Chartered, a bank, wrote in a note.

U.S.-operated energy assets in Iraq are at risk because they rely heavily on transit through the Strait of Hormuz, they added.

Israel has attacked Lebanon. Iran has responded with strikes against energy infrastructure in Gulf countries and tankers in the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas typically passes.

Andrew Lipow, president of consultancy Lipow Oil Associates, said Iran’s attacks on infrastructure could boost oil prices by $10 with Brent going to $90 and up.

Tankers and container ships are avoiding the waterway after insurers cancelled coverage for vessels and global oil and gas shipping rates soared. Concerns increased after Iranian media reported on Monday that Iran will fire on any ship trying to pass through the Strait of Hormuz.

U.S. President Donald Trump said U.S. and Israeli air attacks were projected to last four to five weeks but could go on longer. Trump also noted that the U.S. was considering oil tanker insurance support.

LOOKING FOR OTHER SUPPLIERS

Citing the Strait of Hormuz, India and Indonesia said they were seeking alternative energy supplies. In China, supply disruptions were causing some refineries to shut or push ahead maintenance plans.

Since the start of attacks, oil and gas infrastructure in several countries has shut because of damage or as a precaution. Qatar has stopped liquefied natural gas production, Israel has stopped production at some gas fields, Saudi Arabia shut its biggest refinery and output in Iraq has dropped.

Saudi oil giant Aramco is attempting to reroute some crude exports to the Red Sea to bypass the Strait of Hormuz where the risk of attacks has slowed shipping to a near halt, sources said.

GASOLINE AND DIESEL

U.S. diesel futures jumped around 12% to their highest since September 2023. U.S. gasoline futures climbed about 4% to $2.47 a gallon, their highest since July 2024. Crack spreads, which measure refining profit margins, soared to their highest since 2023.

In global natural gas markets, benchmark Dutch contracts, British gas prices and European and Asian LNG prices all jumped.

The premium of Brent over WTI rose to $8 a barrel, its highest since November 2022. Analysts have said that when this premium rises over $4, it can support U .S. crude exports.

In the U.S., traders awaited storage reports from the American Petroleum Institute (API) trade group on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday. Analysts projected energy firms added 2.2 million barrels of crude to storage during the week ended February 27. [EIA/S] [API/S]

(Reporting by Siddharth Cavale and Scott DiSavino in New York, Shadia Nasralla in LondonAdditional reporting by Stephanie Kelly in New York, Anushree Mukherjee in Bengaluru and Emily Chow in SingaporeEditing by David Goodman and David Gregorio)