Oil prices jump to four-year high after US and Israeli strikes on Iran
Oil prices surged overnight from Sunday to Monday, recording their largest daily increase in four years following US and Israeli attacks on Iran. Although prices later eased, oil remains sharply higher amid mounting tensions in the Middle East.
The price of a barrel of Brent crude rose by 13 per cent in early Asian trading to above 82 USD, after closing at 72.87 USD on Friday. As trading continued, gains moderated, with Brent falling back to around 78 USD, still up more than 6 per cent on the day.
Markets are reacting primarily to escalating tensions around the Strait of Hormuz, the strategic waterway through which roughly one-fifth of the world’s oil supply passes. Oil exports from the Persian Gulf must transit the strait en route to major markets including China, Japan and India.
While Iran produces approximately 3.3 million barrels of oil per day, or around 3 per cent of global output, its strategic importance lies chiefly in its position along the Strait of Hormuz. In response to the heightened risk, shipowners and traders have voluntarily suspended traffic through the passage.
Iran has said the strait will remain open, but has also confirmed attacks on three oil tankers in the area. US president Donald Trump said the US had destroyed nine Iranian naval vessels.
How long the price surge will last remains uncertain. Some analysts warn that further increases are possible if the conflict intensifies, while others believe tensions could subside within one to two weeks if Washington de-escalates.
Tankers are seen at the Khor Fakkan Container Terminal along the Strait of Hormuz © PHOTO GIUSEPPE CACACE / AFP
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