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 rose sharply when market trading began Sunday after U.S. and Israeli attacks on Iran and retaliatory strikes targeting Israel and U.S. military installations around the Gulf disrupted the global energy supply chain.
Traders feared oil shipments from Iran and other Middle Eastern producers would slow or stop. Attacks across the region, including strikes on two vessels transiting the Strait of Hormuz — the narrow mouth of the Persian Gulf and the world’s most critical oil chokepoint — have threatened countries’ ability to export oil. Prolonged disruptions would likely push crude oil and gasoline prices higher, energy experts say.
West Texas Intermediate, the U.S. benchmark, was about $72 a barrel Sunday night, up roughly 8% from about $67 on Friday, according to CME Group. Brent crude, the international standard, traded near $79 a barrel Sunday night, an increase of about 8% from $72.87 on Friday, per FactSet.
Approximately 15 million barrels per day — about 20% of global oil — transit the Strait of Hormuz, Rystad Energy notes. The strait is bordered to the north by Iran and serves as the exit route for oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran. Iran briefly closed parts of the strait in mid-February for what it described as a military drill; further constraints on the channel could reduce supply and elevate prices.
In response to market concerns, eight OPEC+ member countries announced Sunday they would raise crude output. OPEC had already planned a 206,000-barrel-per-day increase in April, larger than some analysts expected. Nations boosting production include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
“Markets are more concerned with whether barrels can move than with spare capacity on paper,” said Jorge León, Rystad’s senior vice president and head of geopolitical analysis. If Gulf flows are constrained, additional production will offer limited short-term relief because access to export routes matters more than headline output figures.
Iran exports roughly 1.6 million barrels a day, mostly to China; disruptions to those flows could prompt buyers to seek alternate supplies, adding further upward pressure on energy prices.
