With tension in the Middle East raising questions about global energy supplies, global crude oil prices soared to their highest level in six weeks as violence in the Middle East intensified on Thursday as the Middle East war began to escalate. Brent crude oil prices rose above $96 a barrel and U.S. crude oil prices in New York reached or close to $88 a barrel as the market got to or above $88 a barrel at 8:01 a.m. on Friday.
Brent crude futures rose $1.93, or 2.05 percent, to $96.93 a barrel and WTI rose $1.41, or 1.62 percent, to $88.24 a barrel, up more than three percent during the last trading session.
The increase in crude oil prices comes as Middle Eastern geopolitical tension rumbles on. Investors are growing concerned that the conflict could disrupt important shipping routes and choke global oil supplies.
All of that comes at a time when there were also more attacks on oil tankers in the Red Sea, one of the world’s busiest maritime trade routes. There are fears of supply chain disruptions and traders are betting on higher oil prices.
US-Iran Tensions Escalate
Investor sentiment was further affected by reports that the US military carried out its twelfth consecutive night of strikes on Iran, signalling no immediate signs of de-escalation.
The military action was prompted partly by comments from U.S. President Donald Trump, who said the United States would attack an Iranian bridge or power plant each time Iran attacked a vessel moving through the Strait of Hormuz. That raised fears that the conflict may spread to other regions.
Explosion Near Strait of Hormuz
Iran’s Revolutionary Guards said an oil tanker caught fire after an explosion as it tried to navigate what they described as a mined route south of the Strait of Hormuz. Two other tankers also abandoned their journey and returned after the incident, adding to the growing security risks in one of the world’s most vital oil transit corridors.
The Strait of Hormuz is a key pathway for international energy trade and almost one-fifth of all crude oil shipments pass through the narrow waterway. If there is a major disruption in the region, it will have an impact on global oil prices.
Market Outlook
If we are going to see the oil prices remain volatile as long as political instability persists, it is likely that crude oil prices will be volatile. Market players will be watching developments in the Middle East, especially in the Strait of Hormuz and the Red Sea, since further rise in tensions might threaten to hurt global oil supplies.
With Brent above $96 and WTI above $88, oil prices are very sensitive to geopolitical events, and the coming days are very much about global energy prices and inflation expectations for oil prices.
Comments
Please to leave a comment on this article.