Oil prices spike as Middle East conflict rattles global markets
Photo: oil prices rise (Getty Images)
Global oil prices surged amid the ongoing conflict in the Middle East. The fighting threatens the global economy with a potential energy crisis and renewed inflation, according to Reuters.
Brent crude jumped 6.4% to $77.57 per barrel, briefly surpassing $82.00 at one point, while US crude rose 6.2% to $71.17 per barrel.
Gold, considered a safe-haven asset, climbed 1.6% to $5,360 per ounce.
All eyes were on the Strait of Hormuz, through which about one-fifth of the world’s seaborne oil supply and 20% of liquefied natural gas passes.
Although the critical waterway has not yet been blocked, ship-tracking data showed tankers clustering on both sides of the strait, fearing attacks or struggling to obtain insurance coverage.
“The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million barrels per day (bpd) of crude oil from reaching markets,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.
A prolonged rise in oil prices risks reigniting inflationary pressure worldwide and would effectively act as a tax on businesses and consumers, potentially dampening demand.
On Sunday, OPEC+ agreed to a modest production increase of 206,000 barrels per day in April, though much of that output still needs to be shipped from the Middle East by tanker.
The oil shock also spilled over into currency markets, with the US dollar emerging as the main beneficiary. The United States is a net energy exporter, and U.S. Treasury bonds are still viewed as a liquid safe haven during times of stress, pushing the euro down 0.2% to $1.1787.
Earlier, it was reported that traders and major oil companies began suspending crude shipments through the strategically vital Strait of Hormuz amid escalating military tensions between Iran, Israel, and the United States.
At least four major companies decided to temporarily halt vessel movements in response to mutual attacks in the region and rising threats to shipping.
It was also reported that near Oman’s Musandam Peninsula, Iran attacked a tanker sanctioned by the US and EU for transporting Iranian oil. Four crew members were injured.
