Oil prices surge above $90 a barrel due to Strait of Hormuz disruption

Oil prices surged after shipping through the Strait of Hormuz was paralyzed following the start of the US-Israeli attack on Iran. North Sea Brent crude topped $90 a barrel for the first time in about two years, while US WTI crude also rose above $90. Over the week as a whole, WTI posted its biggest weekly gain since 1983.

North Sea Brent crude rose 8.5 percent today to $92.69 a barrel. US light crude West Texas Intermediate (WTI) gained 12.2 percent to $90.90 a barrel. Brent rose 28 percent over the week, its biggest weekly gain since April 2020. WTI climbed 35.63 percent, its biggest gain since 1983.

Under normal operating conditions, around a fifth of the world’s oil supplies pass through the Strait of Hormuz. According to current information, shipping in the area has fallen by around 90 percent since the war began.

The Wall Street Journal (WSJ) reported that Kuwait had begun curbing production at some oil fields because it had run out of storage capacity for the accumulated crude. In recent days, concerns have also emerged about the impact of oil prices on inflation if the war continues for an extended period. Citigroup estimates that disruption to shipping through the Strait of Hormuz is removing seven to 11 million barrels a day from the oil market.

Japan has begun considering tapping its oil reserves, although Tokyo has yet to take any action. Speculation is spreading in the market, however, that several countries could coordinate a release of emergency oil stocks to maximize the impact, Bloomberg reported.

Qatar’s energy minister told the Financial Times (FT) that oil could reach $150 a barrel in two to three weeks if tankers are unable to pass through the Strait of Hormuz.

Oil prices in dollars per barrel (about 159 litres)