KEY POINTS
- Oil prices have surged above $100 per barrel, rising over 40% this month amid escalating Middle East tensions.
- Disruptions in the Strait of Hormuz and attacks on key oil infrastructure have heightened global supply concerns.
- Strategic oil reserve releases may ease pressure temporarily, but stalled diplomacy signals prolonged market uncertainty.
Oil prices extended their upward trajectory on Monday, as the ongoing conflict involving the United States, Israel, and Iran entered its third week, intensifying concerns over global supply disruptions.
The sustained hostilities have heightened fears over damage to critical oil infrastructure and prolonged instability across the Middle East, keeping global energy markets on edge. Brent crude rose by $2.01, or 1.95%, to $105.15 per barrel, while U.S. West Texas Intermediate (WTI) climbed $1.61, or 1.63%, to $100.32 per barrel.
Both benchmarks have surged by more than 40% this month, reaching their highest levels since 2022, reflecting growing anxiety over a potential long-term supply crunch.
Strait of Hormuz Disruption Raises Global Alarm
A major driver of the rally is the disruption to shipping through the Strait of Hormuz, a critical chokepoint responsible for about one-fifth of global oil supply.
Iran’s decision to halt shipments through the waterway following U.S.–Israeli attacks has amplified fears of a significant supply shock. The strategic importance of the route means any prolonged closure could severely impact global oil flows.
Further escalating tensions, U.S. President Donald Trump has threatened additional strikes on Iran’s Kharg Island, the country’s main oil export hub, which accounts for roughly 90% of its crude exports. Tehran has, in turn, vowed retaliation, signalling that the conflict may persist.
The crisis widened after Iranian drones reportedly struck a major oil terminal in Fujairah, United Arab Emirates, shortly after attacks on Kharg Island.
Although oil loading operations in Fujairah have resumed, uncertainty remains over whether full capacity has been restored. The port, located outside the Strait of Hormuz, exports around one million barrels per day of Murban crude, about 1% of global oil demand.
These developments have compounded fears of broader disruptions to regional supply infrastructure.
