Oil prices rise as Iran war threatens shipping through strait of Hormuz | US-Israel war on Iran
Oil prices rose and stock markets came under pressure on Monday after intense US-Israeli attacks on Iran raised fears of significant global economic disruption.
Brent crude oil reached its highest level in 14 months, reaching $ 82 per barrel, with an increase of up to 13 percent in early trading, as the effective closure of the Strait of Hormuz, one of the most important arteries of global trade, increased concerns about oil supply.
The Nikkei 225 in Tokyo fell nearly 2.4% as traders in Asia reacted to the weekend’s developments. It later retreated to 1.5%. Premarket trading also had Wall Street on track to open lower on Monday.
Sydney’s ASX 200 opened sharply lower, trading around 0.4% lower, before recovering. CSI 300 down 0.6% in Shanghai
Gold, often seen as a safe haven asset by investors in times of crisis, rose 2.8% to $5,397.10 per ounce.
While US and Israeli military attacks on Iran show no signs of abating, Donald Trump has suggested the conflict could last another four weeks and said attacks will continue until US targets are achieved.
While oil retreated slightly from initial highs, Brent remained up 4% in early trading.
As prices rose, all eyes turned to the Strait of Hormuz, through which approximately one-fifth of oil supplies and seaborne gas tankers pass.
A few hours after Saturday’s US-Israeli attacks, Tehran reportedly warned tankers in the strait that no ships would be allowed to pass.
According to the British maritime security agency, United Kingdom Maritime Trade Operations (UKMTO), two ships were attacked in the strait, one off the coast of Oman and the other off the UAE.
While Iran has yet to officially confirm the closure of the vital waterway, maritime monitoring sites have shown tankers either piled up on either side of the strait, wary of attack or unable to obtain insurance for the journey.
The International Maritime Organization called on ships to avoid the Strait of Hormuz. Its secretary general, Arsenio Dominguez, expressed deep concern over reports that many sailors were injured in the attacks.
“I urge all transportation companies to exercise maximum caution,” Dominguez said. “Where possible, ships should avoid transiting the affected area until conditions improve.”
Multinational shipping company Maersk announced on Sunday that it has stopped transiting through the Strait of Hormuz and the Suez Canal, another vital artery of the world economy, citing “security” reasons. The OPEC+ cartel of producing countries agreed on Sunday to a modest 206,000 barrel-a-day increase in oil production for April, but much of that product must leave the Middle East by tanker.
Iran is one of the cartel’s largest producers, accounting for 4.5% of global supply; so any disruption to its own shipments is likely to have an impact on the wider market.
“The most immediate and concrete development affecting the oil markets is the effective halt of traffic in the Strait of Hormuz, preventing 15 million barrels of crude oil per day from reaching the markets,” said Jorge León, head of geopolitical analysis at Rystad Energy.
“Unless signals of de-escalation emerge quickly, we expect a significant upward repricing of oil.”
Reuters and AFP contributed to this report
