Oil prices rose today as the US-Israeli war on Iran continued to disrupt oil production and shipping in the Middle East, despite US President Donald Trump's call for global efforts to secure the vital Strait of Hormuz.
Brent crude futures rose $2.30, or 2.2%, to $105.44 a barrel this morning, while West Texas Intermediate crude gained $1.29, or 1.3%, to $100 a barrel.
Both contracts have surged more than 40% this month to their highest since 2022, after the US-Israeli attacks on Iran prompted Tehran to halt shipping through the Strait of Hormuz, a critical waterway for energy shipments, choking off a fifth of global oil and LNG supplies.
Oil-loading operations have been suspended at the United Arab Emirates port of Fujairah today, two sources told Reuters, after a drone attack sparked a fire in the emirate's petroleum industrial zone.
Fujairah, outside the Strait of Hormuz, is the outlet for about 1 million barrels per day of the UAE's flagship Murban crude oil - a volume equal to about 1% of world demand.
The war in the Middle East is creating the biggest oil supply disruption in history, the International Energy Agency said on Thursday, as major oil producers such as Saudi Arabia, Iraq and the UAE reduced production since the conflict.
Investors seem to recognise that if just two weeks of disruption at the Strait of Hormuz have inflicted this level of damage on production, exports and refining, the consequences of a prolonged conflict would be severe, especially as inventories are steadily depleted, said PVM analyst Tamas Varga.
"US strikes over the weekend on Kharg Island raised supply concerns, as most of Iran's oil exports pass through it," ING analysts said today.
While the strikes appear to have targeted the military, rather than energy, infrastructure, they still pose supply risks since Iranian oil is about the only oil moving through the Strait of Hormuz for now, ING said.
Over the weekend, Trump threatened further strikes on Iran's Kharg Island, which handles about 90% of its exports, after hitting military targets there, spurring further retaliation from Tehran.
Trump said yesterday he was demanding that other countries help to protect the key energy route, adding that Washington was in talks with several nations about policing the strait.
The US is also in contact with Iran, Trump said, but expressed doubt that Tehran was prepared for serious talks to end the conflict.
The International Energy Agency said yesterday that more than 400 million barrels of oil reserves will begin flowing to the market soon, a record draw aimed at combating price spikes caused by the Middle East war.
Stocks from countries in Asia and Oceania will be released immediately, while those from Europe and the Americas would be available at the end of March, the agency said.
"As the conflict enters its third week, the lack of a clear denouement has left global markets increasingly worried about an uncontrollable escalatory spiral," SEB's Meyersson said.
Still, US Energy Secretary Chris Wright said he expected an end to the war within "the next few weeks," with oil supplies rebounding and energy costs falling afterwards.
