Iran war drives oil price above $100 a barrel for first time since 2022 | Oil
Global oil prices have breached the $100 (£74) per barrel barrier for the first time since 2022, as escalating military aggression in the Middle East continues to wipe 20 million barrels of oil from the market every day.
International benchmark Brent crude rose 12.2% to $104.05 per barrel as new week trading began in Asia Pacific markets; Market prices have risen above this important psychological threshold for the first time since Russia’s invasion of Ukraine.
Prices rose after the weekend, when conflict escalated in the Middle East and Kuwait’s national oil company announced “precautionary” cuts in crude oil production.
The oil price is back in triple digits after its biggest weekly gains since the Covid-19 pandemic six years ago, including a $10 jump in the US crude price on Friday alone.
“The market’s deadline for the Trump administration expired at the end of last week,” according to Clayton Seigle, a senior fellow at the Center for Strategic and International Studies.
“A deficit of 20 million barrels per day (mb/d) has a global impact [oil market] balances without any sign of relief. On the contrary, President Trump is demanding unconditional surrender, which is unlikely. “While observers initially thought his dismissal of painful oil prices was a bluff, it is now clear that is not the case,” he said.
Overall, oil prices are up two-thirds from just above $60 a barrel at the beginning of the year. Prices had already risen in January and February, then accelerated after the US-Israeli attack on Iran about a week ago, which disrupted a vital trade route for Middle East oil supplies through the Strait of Hormuz.
Fears about a global oil shortage were further raised late last week by Qatar’s Energy Minister, who predicted that if the war continued unabated, all Gulf energy exporters would be forced to halt production within weeks and oil would rise to $150 a barrel.
Oil storage facilities in Saudi Arabia, the United Arab Emirates and Kuwait are reaching their limits; This means that major oil fields may have to be closed if crude oil cannot be exported to the global market through the Strait of Hormuz.
Hundreds of tankers trying to pass through the strait came to a halt after the Iranian Revolutionary Guards threatened to “set fire” to every ship using the trade route, which carries one fifth of the world’s oil and liquefied natural gas.
Seigle warned that oil and gas exports from the Middle East would not resume “until ship owners, operators and insurers feel sufficiently safe from the threat environment posed by Iranian warships and aircraft, missiles, drones, speedboats and naval mines.”
The White House has proposed countermeasures such as rerouting Saudi crude oil through the Red Sea, tapping into emergency U.S. crude reserves, or expanding government-backed insurance to shipping companies. But that wouldn’t be enough to offset the loss of 20 million barrels of oil per day “or anywhere in that ballpark,” Seigle added.
