Chicago, Mar 9: Crude oil prices surged above $115 a barrel on Monday as the escalating war involving Iran disrupted production and shipping routes in the Middle East, rattling global financial markets and raising fears of supply shortages.
The price of Brent crude, the international benchmark, briefly climbed to $119.50 per barrel before easing to around $112.98 during trading. US benchmark West Texas Intermediate (WTI) also spiked to $119.48 a barrel before falling back to about $110.17.
Oil prices have jumped sharply as the conflict, now entering its second week, threatens key oil-producing regions and vital shipping routes in the Persian Gulf, raising concerns over the stability of global energy supplies.
Around 15 million barrels of crude oil — nearly 20 percent of the world’s total supply — normally pass through the Strait of Hormuz each day, according to research firm Rystad Energy. The waterway, bordered by Iran to the north, serves as a crucial transit route for oil and gas shipments from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran.
However, fears of Iranian missile and drone attacks have nearly halted tanker traffic through the strait, severely affecting the movement of crude oil and natural gas from the region.
The conflict has also intensified attacks on energy infrastructure. Bahrain accused Iran of striking a desalination plant critical for drinking water supplies, while Israeli strikes overnight set oil depots in Tehran ablaze.
Meanwhile, Iraq, Kuwait and the United Arab Emirates have reportedly cut oil production as storage facilities fill up due to reduced export capacity. Since the war began, Iran, Israel and the United States have targeted several oil and gas facilities, further worsening concerns over supply disruptions.
The surge in oil and gas prices is pushing fuel costs higher worldwide, affecting industries and increasing pressure on economies—particularly in Asia, which relies heavily on energy imports from the Middle East.
The last time Brent crude and US oil futures traded near current levels was in 2022 following Russia’s invasion of Ukraine.
Rising energy prices are also fuelling inflation, straining household budgets and dampening consumer spending, a key driver of many major economies.
Financial markets reacted sharply to the developments. Japan’s benchmark Nikkei 225 index plunged more than 7 percent in early trading on Monday, while other global markets also declined.
In the United States, the average price of regular gasoline rose to $3.45 per gallon on Sunday, about 47 cents higher than a week earlier, according to the AAA motor club. Diesel prices climbed to around $4.60 per gallon, marking an increase of about 83 cents over the same period.
US Energy Secretary Chris Wright said on CNN’s “State of the Union” that gasoline prices could fall below $3 per gallon again soon, adding that even in the worst case the disruption would likely last weeks rather than months.
Analysts warn that if oil prices remain above $100 per barrel for an extended period, it could place significant strain on the global economy.
Iranian authorities said Israeli strikes on oil depots in Tehran and a petroleum transfer terminal early Sunday killed four people. Israel’s military claimed the facilities were being used by Iran’s armed forces to fuel missile launches.
Iran exports roughly 1.6 million barrels of oil per day, most of it to China, which may have to seek alternative supplies if Iranian exports are disrupted — another factor that could drive prices higher.
Natural gas prices have also increased during the conflict, though at a slower pace. Gas was trading at about $3.33 per 1,000 cubic feet late Sunday, up 4.6 percent from its Friday closing price of $3.19 after rising nearly 11 percent last week.
US stock index futures fell early Monday, signalling likely losses on Wall Street. On Friday, the S&P 500 dropped 1.3 percent, the Nasdaq Composite declined 1.6 percent, and the Dow Jones Industrial Average plunged by as much as 945 points before closing with a loss of about 450 points. (Agencies)
