Oil spikes again amid Middle East conflict
As the US-Israeli war against Iran enters its third week, oil prices have risen again; This puts oil infrastructure at risk and keeps the Strait of Hormuz closed in the world’s largest supply disruption.
Oil prices continued their gains at Monday’s open; Brent crude futures rose $2.76 ($A3.95), or 2.68 per cent, to $105.90 ($A151.53) per barrel, after closing $2.68 ($A3.83) higher on Friday.
US West Texas Intermediate crude rose US$2.29 (A$A3.28) or 2.32 per cent to US$101 (A$A145) a barrel after gaining nearly US$3 (A$A4.3) in the previous session.
More than 400 million barrels of oil reserves will soon begin flowing to the market, the International Energy Agency said Sunday; this is a record draw aimed at combating price increases caused by the Middle East war.
The agency said that stocks from Asia and Oceania will be announced immediately, while stocks from Europe and America will be available at the end of March.
Brent and US West Texas Intermediate crude oil futures have surged more than 40 percent so far this month to their highest levels since 2022 after US-Israeli attacks on Iran led Tehran to halt shipping through the Strait of Hormuz, a key transit point for a fifth of global oil supplies.
US President Donald Trump has called on allies to deploy warships to help secure the strategic passage.
According to the Wall Street Journal’s report on Sunday, Trump plans to form a coalition this week that will escort ships through the Strait of Hormuz.
Trump also threatened more attacks on Iran’s Kharg Island oil export hub after the United States struck military targets there on Saturday. The threat was met with a defiant response, with Tehran retaliating further.
Iranian drones hit a major oil terminal in Fujairah, United Arab Emirates, shortly after the attacks on Kharg.
“This indicates that conflict is escalating,” said JP Morgan analyst Natasha Kaneva.
JPM analysts said the UAE’s Fujairah, as well as Saudi Arabia’s Ras Tanura export terminal and Abqaiq oil processing facilities, are listed as critical and highly vulnerable energy facilities in the Gulf.
Oil loading operations in Fujairah have resumed, an industry source based in Fujairah told Reuters on Sunday.
Fujairah, outside the Strait of Hormuz, is the originating point for around one million barrels per day (bpd) of the UAE’s flagship Murban crude; this is a volume equal to approximately one percent of world demand.
According to the International Energy Agency, global oil supplies are expected to decrease by eight million barrels per day in March due to transportation disruptions, while Middle Eastern producers have cut production by at least 10 million barrels per day.
US Energy Secretary Chris Wright said on Sunday that he expects the war with Iran to end “within the next few weeks.” He added that oil supplies will recover and energy costs will then fall.
Meanwhile, the Trump administration has rebuffed efforts by Middle Eastern allies to open diplomatic talks, while Iran has ruled out any ceasefire until U.S. and Israeli attacks end, dampening hopes for a quick end to the conflict, according to three sources familiar with the effort.
