- Brent crude jumped as much as 7% to above $115 a barrel, WTI hovered near $97, and European natural gas surged up to 35%.
- Saudi Arabia warned of potential military retaliation after missile attacks, while Iran vowed further strikes on oil and gas infrastructure.
- Markets point to rising volatility, with short interest in USO up sharply, even as analysts warn physical supply shortages are outpacing market pricing.
Oil stocks surged in premarket trading on Thursday after crude prices spiked on fresh attacks targeting key Middle East energy infrastructure, deepening fears of a prolonged global supply shock.
Shares of Battalion Oil (BATL) climbed 8%, Trio Petroleum (TPET) added 7%, while ProShares Ultra Bloomberg Natural Gas ETF (BOIL), Indonesia Energy (INDO) and EON Resources (EONR) each rose 2%. In contrast, United States Oil Fund (USO) fell 2%.
Brent crude jumped as much as 7% to top $115 a barrel, while West Texas Intermediate traded near $97. European natural gas prices surged as much as 35%.
Oil Surges As Gulf Energy Sites Come Under Attack
The oil rally follows a sharp escalation in the Middle East, with Iran targeting key energy facilities after earlier strikes on its South Pars gas field. Missile attacks hit a major LNG site in Qatar, causing “extensive damage,” while additional strikes impacted petrochemical assets in Iran and forced gas operations in Abu Dhabi to halt after debris from intercepted missiles fell on facilities.
Saudi Arabia signaled potential military retaliation after being targeted by Iranian ballistic missiles, with Foreign Minister Prince Faisal bin Farhan saying trust with Tehran has been shattered and that the kingdom “reserves the right to take military actions if deemed necessary.”
Iran has vowed further strikes on oil and gas infrastructure across the Gulf, as the conflict disrupts shipping through the Strait of Hormuz and cuts regional output, pushing oil up about 50% since the war began and widening the Brent-WTI gap to around $17.
‘Acute Tightness’: Analysts Warn Of Supply Crunch
Ole Hansen, head of commodity strategy at Saxo Bank, said on X that the latest escalation has “direct implications for global energy supply,” highlighting “acute tightness” in the market.
He added that West Texas Intermediate continues to trade below $100, with the discount to Brent widening to around $16.5, reflecting “regional dislocations” as well as rising speculation that the U.S. may consider measures such as an export ban or other interventions to curb domestic fuel prices.
The impact is spreading across fuel markets, with natural gas prices in Europe and Asia extending gains after damage to LNG infrastructure. Patrick De Haan, petroleum analyst at GasBuddy, said on X that diesel prices are rising at a pace exceeding previous cycles. “The current surge is now outpacing 2022 on a sustained basis,” he said.
Bearish Bets Rise Despite Oil Rally
Market positioning is also pointing to heightened volatility. The Kobeissi Letter said on X that short interest in U.S. oil funds has surged even as prices rise, with bearish bets on the USO increasing about 50% over the past month.
“This means traders are increasingly betting against rising oil prices, even as the rally continues,” the note said, warning it creates “a setup that often leads to extreme volatility.”
Physical Oil Shortages Outpace Market Pricing
Jeff Currie, chief strategy officer at Carlyle Energy Pathways, said current oil prices may not fully reflect real-world supply constraints. “The paper markets… they’ve entirely disconnected from the physical markets,” Currie said, noting crude delivered into Asia has traded between $130 and $170 per barrel.
He called the situation a “molecular contagion,” with shortages spreading across global supply chains. “You can’t print molecules,” Currie said, emphasizing that financial tools cannot resolve physical supply disruptions. He added that the current supply shock is comparable to the demand shock seen during the pandemic.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment toward BOIL, USO, INDO, TPET, and BATL was ‘bearish’, with message volume ranging from ‘normal’ and ‘high’ to ‘low’. In contrast, sentiment toward EONR was ‘extremely bullish’ amid ‘extremely high’ message volume.
So far this year, BOIL is down 78% and TPET has fallen 20%, while USO has gained 68%, INDO is up 51%, BATL has surged 900% and EONR is up over 100%.
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