Fishermen work in front of oil tankers south of the Strait of Hormuz on Jan. 19, 2012, offshore of the town of Ras Al Khaimah in United Arab Emirates. Kamran Jebreili/AP
NEW YORK — Oil prices jumped sharply when market trading opened Sunday after U.S. and Israeli strikes on Iran and retaliatory attacks across the region disrupted global energy flows. Traders bet that supply from Iran and other Middle East producers could slow or stop, pushing prices higher.
West Texas Intermediate, the U.S. benchmark, traded around $72 a barrel Sunday night, up about 8% from roughly $67 on Friday, according to CME Group. Brent crude, the international benchmark, was near $79 per barrel, also up roughly 8% from $72.87 on Friday, FactSet data showed.
The Strait of Hormuz, the narrow entrance to the Persian Gulf, is a critical chokepoint: about 15 million barrels per day — roughly 20% of the world’s oil — transit the strait, Rystad Energy says. Tankers there carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran. Attacks in the area, including on two vessels transiting the strait, and Iran’s temporary mid-February closure of parts of the waterway for a military drill, have raised concerns that exports could be constrained, tightening global supply and lifting crude and gasoline prices.
In response to the market backdrop, eight OPEC+ countries said Sunday they would raise crude output. The Organization of the Petroleum Exporting Countries had planned a meeting before the conflict escalated and announced an increase of 206,000 barrels per day for April — more than analysts had expected. Producers boosting output include Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman.
“Roughly one-fifth of global oil supply passes through the Strait of Hormuz, a vital artery for world trade, meaning markets are more concerned with whether barrels can move than with spare capacity on paper,” Jorge León, Rystad’s senior vice president and head of geopolitical analysis, wrote in an email. “If flows through the Gulf are constrained, additional production will provide limited immediate relief, making access to export routes far more important than headline output targets.”
Iran exports about 1.6 million barrels a day, mostly to China; disruptions to those shipments could force buyers to seek alternative supplies, adding further upward pressure on energy prices.
