Oil prices surged at the start of trading on Sunday, driven by U.S. and Israeli attacks on Iran and retaliatory strikes against military installations in the Gulf, disrupting the global energy supply chain.
Traders anticipated a slowdown or halt in oil supplies from Iran and the broader Middle East. Recent attacks, including on two vessels in the Strait of Hormuz, threaten to restrict oil exports, likely leading to increased crude oil and gasoline prices, experts warn.
West Texas Intermediate crude oil reached approximately $72 a barrel on Sunday night, an 8% rise from Friday’s $67.
The Strait of Hormuz, a critical oil chokepoint, sees around 15 million barrels of crude oil shipped daily, accounting for about 20% of the world’s supply, according to Rystad Energy. Tankers navigating this narrow waterway transport oil from major producers like Saudi Arabia, Kuwait, and Iran.
Iran had previously shut down parts of the strait for a military drill in mid-February. Any further disruptions could result in decreased supply and soaring oil prices.
In response to the escalating situation, eight OPEC+ countries announced an increase in crude production on Sunday. The Organization of Petroleum Exporting Countries plans to boost output by 206,000 barrels per day in April, exceeding analysts’ expectations. The countries involved include Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman.
“About one-fifth of global oil supply transits the Strait of Hormuz, a vital trade artery,” noted Jorge León, Rystad’s senior vice president of geopolitical analysis. “If Gulf flows are restricted, increased production may offer limited relief, making access to export routes more critical than nominal output targets.”
Iran currently exports around 1.6 million barrels of oil daily, primarily to China, which may need to seek alternative sources if Iranian exports are disrupted, further driving up energy prices.
