Global oil prices soared in early week trading after attacks involving the US, Israel, and Iran rocked global energy supply chains, particularly in the Persian Gulf region.

Traders fear oil supplies from Iran and Middle Eastern nations could slow down or be completely disrupted. Attacks in the region, including incidents targeting two vessels passing through the Strait of Hormuz — the world's most critical oil transit point — have increased risks to energy exports.

Oil prices rise nearly 9%

  • US West Texas Intermediate (WTI) crude traded at $72.79 per barrel, up 8.6% from approximately $67 on Friday (per CME Group).
  • Brent crude — the international benchmark — reached $79.41 per barrel, up 9% from the previous $72.87, hitting its highest level in seven months (per FactSet).

Energy experts suggest that if attacks persist, crude oil and retail gasoline prices could continue to climb, adding further pressure to global inflation.

Strait of Hormuz – A Strategic Bottleneck

Approximately 15 million barrels of oil per day, or 20% of global supply, pass through the Strait of Hormuz, according to Rystad Energy. This maritime route transports oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE, and Iran.

Iran previously temporarily closed part of the strait in mid-February during a military exercise, causing oil prices to rise by about 6% in the following days.

OPEC+ increases production but impact is limited

Eight nations in the OPEC+ alliance announced they would increase production by 206,000 barrels per day starting in April, including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman. However, analysts believe that if traffic through the Persian Gulf is restricted, the production hike may not be enough to compensate for shipping disruptions.

Iran currently exports about 1.6 million barrels of oil per day, primarily to China. If this supply is cut, China may have to find alternatives, increasing pressure on energy prices.

Higher energy prices mean consumers may pay more for gasoline, food, and essential goods as inflation remains high.