Oil Soars Above $100 as Iran War Forces Deeper Production Cuts
Oil surged through $100 a barrel as more major Middle East producers cut output — including OPEC leader Saudi Arabia — while tanker traffic through the critical Strait of Hormuz remained near a standstill, choking off supplies to global markets.
Brent jumped about 13% to around $104 a barrel, on track for its biggest one-day rise in dollar terms since futures began trading in 1988. Prices later eased from near $120 after signs that the world’s largest economies are considering a coordinated release of emergency oil stockpiles, with G7 finance ministers set to discuss the move later Monday.
Supply stress is becoming more visible as storage fills. Saudi Arabia is starting to curtail production as its tanks near capacity, according to a person familiar with the situation, following similar actions in neighboring countries. The kingdom has been diverting barrels via a pipeline to the western port of Yanbu, but the route does not have enough capacity to fully replace export volumes typically shipped via the Gulf.
The war shows no sign of abating more than a week after U.S. and Israeli strikes on Iran, and its fallout is intensifying fears of a fresh energy-driven inflation shock. The halt in shipping through Hormuz — a narrow waterway that normally handles about one-fifth of the world’s oil — combined with attacks on key energy infrastructure, has pushed crude and natural gas prices sharply higher. Kuwait and the United Arab Emirates began reducing output over the weekend as storage filled rapidly, while Iraq started shutting in production last week.
President Donald Trump addressed the spike in a late-night Truth Social post, calling short-term price moves a “very small price to pay” for the U.S., the world and peace, and arguing prices will fall quickly once “the destruction of the Iran nuclear threat is over.” Still, analysts warn the longer Hormuz remains closed, the more production will be shut in — requiring substantially higher prices to curb demand. JPMorgan analysts said Middle East shut-ins could expand materially by the end of next week if bottlenecks persist and storage continues to fill.
Downstream markets are also tightening. Prices for refined fuels — including diesel — are surging, amplifying inflation risks through transport and logistics. China has reportedly told top refiners to suspend exports of diesel and gasoline, and South Korea is reviewing whether to introduce an oil price cap for the first time in decades. In the U.S., retail gasoline prices have climbed to their highest level since 2024, adding political pressure ahead of midterm elections.
Brent for May settlement was at $104.61 a barrel at 11:13 a.m. in London. WTI for April delivery climbed 13% to $102.52 a barrel. Futures rallied a record 36% last week.
Source : Newsmaker.id
