Gulf Strikes Choke Hormuz, But Iraq Deal and Inventory Surge Rein In Crude's Climb
Brent front-month futures last closed at $108.18 and WTI at $97.23 per Yahoo Finance as of 18 March 2026 13:09 UTC, with both benchmarks holding elevated at the US open as overnight strikes on Gulf energy infrastructure offset a bearish US inventory build and partial Iraqi supply resumption. By 8:52 a.m. ET, Brent had climbed 4.12% to $107.68 and WTI was 1.13% higher at $97.30 per CNBC. Drone strikes on the UAE's ultra-sour gas facility and fires at the Fujairah Oil Industry Zone — coupled with damage near the Strait of Hormuz — stoked fears of prolonged supply disruption. The Shah gas field, with capacity of 1.28 billion standard cubic feet per day, remains suspended following the drone attack per CNBC. Separately, Israeli airstrikes targeted Iran's gas facilities at South Pars and Asaluyeh overnight, though damage extent remains unknown; an Israeli official is reported to be "less worried about gas strikes than oil," limiting the direct crude price impulse from that action per The Jerusalem Post.
Two countervailing forces applied downward pressure during the overnight session. Iraq and Kurdish authorities confirmed a deal to resume 250,000 barrels per day of crude exports via Turkey's Ceyhan port — representing only about 7% of Iraq's pre-disruption exports of roughly 3.5 million bpd from southern Basra fields via the Strait of Hormuz per The New Arab, and described as unlikely to "make much of a difference in global supply" per OilPrice.com — sending prices down more than $2 a barrel per CNBC. US crude inventories also surged 6.56 million barrels in the week ended March 13 — far exceeding the Reuters poll forecast of approximately 380,000 barrels — dragging Brent down $1.15 and WTI down $1.54 in early Asian trading per CNBC. The killing of Iran's security chief Ali Larijani in an Israeli attack was noted by a senior analyst as having "raised hopes that the conflict could end sooner" per CNBC.
Strait of Hormuz vessel traffic has collapsed 95% to approximately five ships per day from 125 previously, with five million barrels of petroleum products having transited daily before the crisis per EL PAÍS English. Citi projects that disruptions to Hormuz flows over the next four to six weeks could remove 11 to 16 million barrels per day from the market, potentially pushing Brent to $110–$120 per barrel — with more severe prolonged outage scenarios potentially averaging $130 in Q2–Q3 or spiking as high as $150 for Brent or even $200 including refined products per CNBC.
Price action at the US open reflects a market caught between competing directional forces rather than a clean bullish read. UAE infrastructure strikes — a significant escalation vector targeting Gulf producer facilities rather than Iranian assets — have anchored Brent above $107. Yet the same reporting notes that US bunker-buster strikes on Iranian missile sites near the Strait raised optimism about a potential Hormuz reopening, creating a simultaneous downward pull on prices.
The inventory surplus of 6.56 million barrels is a substantial bearish data point. Its cause is not specified in the source reporting and is best treated as a supply-demand uncertainty signal rather than a definitive demand indicator.
The Iraq pipeline deal illustrates the scale of the relief problem: 250,000 bpd via Ceyhan represents roughly 19% of Iraq's current collapsed output of approximately 1.3 million bpd, and only about 6% of its pre-war total production of over 4 million bpd — reinforcing the "not a game changer" characterisation from OilPrice.com.
A strategically critical asymmetry has emerged at the Strait: Iran's own exports have remained at approximately 1.2 million bpd via "dark" transits, while other Gulf producer flows through the Strait have collapsed from 14 million bpd to just 400,000 bpd — meaning Iran is effectively weaponising the chokepoint against Gulf rivals while preserving its own export revenue.
Finally, the Federal Reserve is expected to hold rates today, with updated projections showing inflation remaining as high as 3% by late 2026 — well above December's 2.6% projection — embedding oil-driven inflation directly into the rate path.