On Sunday (March 1), the world oil market opened with a sharp increase in oil prices, mainly due to the military strikes launched by the United States and Israel against Iran on Saturday (February 28). Subsequently, Iran also launched missiles and drones towards military facilities of Israel and the United States in the Gulf region, leading to a partial disruption in the global energy supply chain.
Traders speculated that oil supplies from Iran and other regions in the Middle East would slow down or even stop. The series of attacks in the entire Middle East region, including the attacks on two ships crossing the Strait of Hormuz, have already constrained the ability of Middle Eastern countries to export oil to other regions globally. The Strait of Hormuz, located between Iran and Oman at the narrow entrance to the Persian Gulf, is a crucial shipping lane through which at least 20% of the world’s oil passes.
According to data from the Chicago Mercantile Exchange Group (CME Group), the price of the U.S. benchmark West Texas Intermediate crude oil (WTI) on Sunday evening was around $72 per barrel, up by approximately 8% from last Friday’s trading price of around $67 per barrel.
Financial data and software company FactSet’s data shows that the global benchmark Brent crude oil was trading at around $79 per barrel on Sunday evening, up by about 8% from last Friday’s trading price of $72.87 per barrel, which at the time was already the highest level in seven months.
Based on data from the Norwegian energy research and business intelligence company Rystad Energy, approximately 15 million barrels of oil are transported through the Strait of Hormuz every day, making it the most critical chokepoint for oil transportation globally. Tankers passing through the strait carry oil and natural gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates, and Iran.
Iran had temporarily closed parts of the Strait of Hormuz in mid-February for military exercises, causing oil prices to spike by about 6% in the following days.
(This article referenced reporting from the Associated Press)