Oil prices soared back above $100 on Thursday as Iran's fresh attempts to hit supplies in the Middle East and threats to bring down the global economy overshadowed a record release of strategic crude by the International Energy Agency.
The IEA said on March 11 that its members had agreed to unlock 400 million barrels of oil from their reserves, their largest release ever, with 172 million coming from the United States.
However, the move was unable to overcome fears about the choking of energy supplies from the Middle East, with the Strait of Hormuz, through which a fifth of global crude passes, effectively shut down.
Baghdad had already said it was cutting output because of the crisis, with Kuwait and kingpin Saudi Arabia following suit.
Bahrain yesterday reported Iran had carried out an attack on fuel tanks in the country.
Brent jumped more than nine percent to hit as high as $101.59 a barrel, while WTI spiked at just short of $96. The two had rocketed as much as 30 percent on March 9 to a peak of nearly $120.
And with hostilities showing no sign of ending, analysts warned $90-$100 a barrel could be the new normal for a while.
Iran said it was ready for a long war of attrition that would "destroy" the world economy.
"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," wrote Stephen Innes at SPI Asset Management.
"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."
