Oil prices jumped sharply when markets opened Sunday after U.S. and Israeli strikes on Iran and subsequent retaliatory attacks around the region rattled global energy flows. Traders wagered that shipments from Iran and other Middle Eastern producers could be slowed or halted, pushing crude higher.
West Texas Intermediate, the U.S. benchmark, traded around $72 a barrel Sunday night, about an 8% rise from roughly $67 on Friday, according to CME Group. Brent, the international benchmark, was near $79 per barrel, also up roughly 8% from $72.87 on Friday, FactSet data showed.
Concerns center on the Strait of Hormuz, the narrow gateway to the Persian Gulf, through which roughly 15 million barrels per day — about 20% of the world’s oil — transit, Rystad Energy estimates. Tankers in the strait carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran. Recent attacks in the area, including strikes on two vessels transiting the strait and Iran’s temporary mid-February closure of parts of the waterway for a military drill, have heightened fears that exports could be constrained and that global supply and fuel prices could rise.
In response to the disruption and the market reaction, eight OPEC+ producers said Sunday they would increase crude output. The group, which had already scheduled a meeting before the conflict intensified, announced a combined rise of 206,000 barrels per day for April — more than many analysts had expected. Countries signaling higher output include Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman.
Analysts note that additional production may offer limited immediate relief if shipping routes are impaired. “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,” Jorge León, Rystad’s senior vice president and head of geopolitical analysis, wrote in an email.
Iran exports roughly 1.6 million barrels a day, mostly to China; any disruption to those shipments could force buyers to seek alternative supplies and add further upward pressure on crude and gasoline prices.
