Oil Jumps Over 15% as Hormuz Crisis Sparks Supply Concerns
Oil prices pared gains from Monday's session peak but still surged more than 15% to their highest level since mid-2022, driven by supply cuts by several producers and concerns about prolonged shipping disruptions due to the escalating US-Israel war with Iran. Brent rose US$15.51, or 16.7%, to US$108.20 per barrel, while WTI gained US$14.23, or 15.7%, to US$105.13.
The surge was driven by disruptions to tanker movements and heightened security risks, which have already slowed shipping activity. Asia is considered most vulnerable because many buyers rely on Middle Eastern oil, while the crisis centers around the Strait of Hormuz—a passageway through which about a fifth of the world's oil supply passes. Earlier in the day, WTI had surged 31.4% to US$119.48 per barrel, and Brent had risen about 29% to US$119.50.
The rally then eased after the Financial Times reported that G7 finance ministers and the International Energy Agency would discuss the possibility of jointly releasing emergency oil reserves. Saudi Aramco also offered oil supplies for rapid delivery through a series of rare tenders, helping to contain the supply panic in the spot market.
On the regional supply side, Iraq and Kuwait began cutting production, following Qatar's LNG cuts, while analysts predicted the UAE and Saudi Arabia were at risk of similar output cuts as oil storage capacity dwindled. Disruptions also spread downstream: Bahrain's BAPCO declared force majeure after an attack on a refinery complex, while other security incidents were reported in the Fujairah oil industrial zone in the UAE and an attempted drone interception of Saudi Arabia's Shaybah oil field.
Political factors also added to the risk premium, including the appointment of Mojtaba Khamenei as Iran's next supreme leader, which is seen as strengthening the position of hardliners in Tehran. Some analysts warned that price pressures could persist as long as oil flows in Hormuz remain unrecovered and escalations persist, especially if the situation forces well shutdowns, which could slow production recovery. In the US, calls for the release of strategic oil reserves have also grown after a price surge increased the risk of a "price shock" for households and businesses. (asd)
Source: Newsmaker.id
