Global oil prices surged Monday following attacks on ships near the Strait of Hormuz, escalating tensions in the Middle East and raising concerns about potential disruptions to vital energy supplies. Brent crude rose as high as $82 a barrel before settling around $79, a jump of approximately 7.6% from Friday’s close, while West Texas Intermediate climbed around 8% to $72 a barrel.
The attacks, claimed by Iran’s Islamic Revolutionary Guard Corps (IRGC), targeted three US and UK oil tankers in the Gulf and the Strait of Hormuz, alongside missile and drone strikes on military bases and civilian infrastructure across the region. Shipping data indicates hundreds of vessels, including oil and gas tankers, have dropped anchor in nearby waters, anticipating further instability. An official from the European Union’s naval force Aspides reported receiving radio transmissions from Iran’s Revolutionary Guards stating that “no ship is allowed to pass the Strait of Hormuz,” though Tehran has not formally confirmed an order to block the waterway.
The Strait of Hormuz, a narrow passage between Iran and Oman, is the world’s most critical oil chokepoint, carrying roughly 20 million barrels of oil per day – approximately one-fifth of global seaborne crude. Around 20% of global liquefied natural gas also transits the strait, much of it originating from Qatar. The effective halt of traffic through the strait is preventing an estimated 15 million barrels per day of crude oil from reaching markets, according to Jorge Leon, head of geopolitical analysis at Rystad Energy.
While traffic has slowed significantly, with shipowners and insurers reassessing risks, the market has not yet “panicked,” according to Saul Kavonic, head of energy research at MST Marquee. Kavonic noted that, so far, oil transport and production infrastructure have not been primary targets. However, some analysts warn that a prolonged conflict could push prices above $100 a barrel, potentially triggering inflationary pressures and impacting interest rates. Robin Mills, chief executive at Qamar Energy, stated that the price jump will “feed through almost immediately” as oil traders closely monitor developments.
The attacks come amid intensified fighting between the United States, Israel, and Iran. Iran has, for years, threatened to block the Strait of Hormuz in retaliation for attacks, but has stopped short of declaring a full closure. In February, Iran temporarily shut down parts of the strait for a military drill. The UK Maritime Trade Operations Centre (UKMTO) confirmed that two vessels were struck, and an “unknown projectile” exploded near a third.
The situation remains fluid, with international shipping at a near standstill at the strait’s entrance. No immediate diplomatic resolution has been announced, and the IRGC has not issued further statements regarding the passage of vessels through the Strait of Hormuz.
