Oil Prices Jump After Strait of Hormuz Attacks
Global oil prices have surged sharply on Monday after multiple vessels came under attack near the Strait of Hormuz. It intensified fears of supply disruptions as Iran escalates military strikes across the Middle East. The vital waterway, which carries nearly 20% of the world’s oil and gas shipments, has witnessed a sharp decline in maritime movement following security threats issued by Tehran.
According to the UK Maritime Trade Operations (UKMTO), at least two ships were struck by projectiles, while another reported that an “unknown projectile” had “exploded in very close proximity”. Although the crew members on the attacked ships were safe. However, many oil tankers have stopped in nearby Gulf waters instead of entering the narrow shipping route.
In early Asian trading hours, benchmark Brent crude initially climbed more than 10% before stabilizing. By 02:00 GMT, it remained over 4% higher at $76.16 per barrel, while US-traded oil also gained around 4% to reach $69.67.
Rising Shipping Risks Disrupt Key Oil Transit Route
Meanwhile, Iran has urged international shipping operators to avoid the strait. In result, it effectively slow maritime traffic into one of the world’s most strategic transit routes. Analysts noted that insurance premiums for tankers have risen sharply and further discouraging entry into the area.
Saul Kavonic, head of energy research at MST Marquee, told the BBC that, “The market isn’t panicking”. He added that, “There is more clarity that so far, oil transport and production infrastructure hasn’t been a primary target by any side”. However, he emphasized that traders would closely monitor on the shipping activity to resume as soon as possible. It is the only way that it could ease upward pressure on prices.
Ship-tracking platform Kpler reported that nearly 150 tankers had halted operations beyond the strait’s entrance. Although some Iranian and Chinese vessels have continued transit. Meanwhile, most operators have opted to wait amid heightened risks.
OPEC+ Output Boost Amid Global Oil Price Surge Risks
On Sunday, the OPEC+ alliance, which includes Saudi Arabia and Russia, has agreed to raise oil output by 206,000 barrels per day in an attempt to cushion price volatility. Nevertheless, several experts expressed their doubts about the effectiveness of this move, if tensions risen.
Edmund King, president of the AA, warned that ongoing hostilities could affect fuel costs worldwide. “The turmoil and bombing across the Middle East will surely be a catalyst to disrupt oil distribution globally, which will inevitably lead to price hikes”, he said.
Additionally, Danish shipping giant Maersk confirmed that it would suspend sailings through the Bab el-Mandeb Strait and the Suez Canal. Instead, it ha opted to reroute vessels around the Cape of Good Hope. As a result, analysts cautioned that oil prices could exceed $100 per barrel, if the conflict drags on.
Web Resources on Oil Prices Hike Amid US-Israel Attack
1. Reuters.com: Oil jumps 10% on Iran conflict and could spike to $100 a barrel, analysts say
2. CNN.com: Oil surges and stock futures sink after war in Iran disrupts crude supply
3. TheGuardian.com: Oil prices rise as Iran war threatens shipping through strait of Hormuz
4. TheIndependent.com: Oil prices soar as Iran’s attack on ships near Strait of Hormuz raise fears of wider economic shock