Oil Surpasses US$85, Middle East Supply Risks Grow
Oil prices rebounded amid growing concerns about supply disruptions from the Middle East. Brent, the global benchmark, moved above US$85 per barrel after weakening at the start of trading. In the previous three sessions, oil prices had risen by around 12%.
The price increase was triggered by the ongoing US attacks on Iran. Reuters reported that Tehran had asked the Houthi group in Yemen to close the Red Sea shipping lane if Iran's electricity infrastructure was attacked. The route is crucial for Saudi Arabia's oil exports, especially as traffic through the Strait of Hormuz has been disrupted by Iran's war.
The Strait of Hormuz remains a major focus of market attention. Iran has repeatedly threatened to close the route, while attacks on ships this week have disrupted oil shipping from the Persian Gulf region. US Central Command said the number of ships passing through with American support was in the double digits on Tuesday night.
Tensions escalated after US President Donald Trump vowed to escalate attacks on Iran until Tehran stops attacking ships and reopens the energy route. The Wall Street Journal reported that Trump is also considering expanding military operations, including the possibility of seizing Kharg Island, the location of Iran's main oil export terminal.
On the supply side, RBC Capital Markets analysts stated that the seven-day average oil flow through Hormuz has fallen by 4.6 million barrels per day to 3.9 million barrels per day since the fighting resumed. This decline reflects the collapse of the ceasefire, the renewed Iranian attacks, and the reimposition of the US blockade of Iranian ports.
As a result, oil prices have the potential to remain high as long as the risk of disruptions in Hormuz remains high. If the market begins to view these disruptions as semi-permanent, Brent could carry a risk premium for longer, even expected to remain around US$5 to US$15 per barrel above normal prices. This could amplify global inflationary pressures, encourage central banks to remain cautious, pressure risk assets, and keep the energy sector a key investor concern. (asd)
Source: Newsmaker.id
