As the Middle East conflict continues to escalate, international oil prices also continued to climb on Monday (March 30). Brent crude oil futures have seen a cumulative increase of 59% this month, surpassing the record set during the 1990 Gulf War, on track to achieve the largest monthly increase in history.
On Sunday, US President Trump expressed a tough stance on the Iran situation in an interview with the Financial Times. He stated that his preferred solution to the Iran issue is to “take the oil.”
Trump compared this idea to past US actions in Venezuela, where Washington effectively took control of Venezuela’s oil sector after gaining control of the situation.
“Maybe we’ll take Kharg Island, maybe we won’t. We have many options,” Trump said. “This also means we would have to stay on Kharg Island for a while.”
Since the outbreak on February 28, this conflict has gradually spread throughout the Middle East.
Earlier, Hezbollah in Lebanon has been involved in the conflict, and last Saturday, Houthi militants in Yemen also launched attacks on Israel, raising concerns about the Red Sea passage.
Morgan Stanley analyst Natasha Kaneva wrote in a report, “The conflict is no longer just confined to the Persian Gulf and the Strait of Hormuz, but has extended to the Red Sea and the Bab el Mandeb Strait – these are critical chokepoints for global oil and petroleum product flow.”
Data from analysis company Kpler shows that last week, Saudi Arabia redirected some of its crude oil exports from the Red Sea’s Yanbu port, bypassing the Strait of Hormuz, with daily exports reaching 4.658 million barrels.
The Morgan Stanley analyst stated that if exports from Yanbu port are disrupted, Saudi oil would have to be redirected to the Suez-Mediterranean Pipeline (SUMED) in Egypt to transport oil to the Mediterranean.
As a result of this, Brent crude oil futures prices rose by over 3.2% in early Asian trading on Monday, reaching as high as $116.12 per barrel; US West Texas Intermediate (WTI) also rose by 3.4%, reaching $102.96.
Due to the Strait of Hormuz still being effectively blocked, about one-fifth of the global oil and natural gas supply is disrupted, and the energy market is rapidly reassessing geopolitical risks.
Ed Yardeni, President and Chief Investment Strategist of Yardeni Research, stated that with rising long-term conflict risks, global stock markets are beginning to reflect a scenario of “higher and longer” oil prices and interest rates.
David Roche, strategist from Quantum Strategy, also mentioned that the market is increasingly pricing in the possibility of a more aggressive military response from the US, including the possibility of “ground force intervention” and actions to seize Iran’s key export hub, Kharg Island. About 90% of Iran’s oil is exported through this location.
However, as military tensions intensify, diplomatic mediation has not ceased. On Sunday, Pakistani Foreign Minister Dar stated that discussions have been held on potential paths to end the regional war soon and permanently, as well as the possibility of holding US-Iran talks in Islamabad, the capital of Pakistan.