“Oil Prices Surge Nearly 10% Amid Escalating Middle East Tensions – Global Supply at Risk!”

The growing concern over disruption to oil supply from Iran and through the Strait of Hormuz has pushed Brent to its biggest weekly gain since January 2023 © Morteza Nikoubazl via Reuters Co

Oil prices have risen sharply over the past week, marking the biggest weekly gain since January 2023. Brent crude, the global benchmark, climbed nearly 10% by Friday, hitting $78.05 a barrel. This spike in prices has been triggered by escalating tensions in the Middle East, specifically fears that Israel or Iran could target key energy infrastructure.

The possibility of military action involving Israel and Iran has created uncertainty in the world’s most critical oil-exporting region. Concerns have mounted over the potential disruption of oil supplies through the Strait of Hormuz, a key transit route for about a fifth of global consumption. Analysts suggest that any significant interference with the Strait could send oil prices soaring to $150 a barrel, a situation that would have severe consequences for the global economy.

On Thursday, U.S. President Joe Biden mentioned that Israel had considered striking Iranian oil facilities after a missile barrage from Iran. However, by Friday, he stated that Israel had not made a final decision and suggested that alternative actions should be explored. This tempered the oil price rally, but concerns remain high.

Iran exports about 1.7 million barrels of oil per day, mainly from Kharg Island, located off its southern coast. If Israel were to target this facility, or if Iran retaliated by hitting energy infrastructure in the region, the impact on global supply could be devastating. Iranian officials, including Brigadier General Ali Fadavi, have warned that any misstep by Israel would result in retaliation that could severely impact Israel’s energy sources.

The potential for an “energy war” has also been raised by Kata’ib Hizbollah, a militant group backed by Iran. They suggested that if such a conflict erupts, the world could lose 12 million barrels per day of oil, leading to a massive disruption in global supply. Although OPEC countries have some spare capacity, primarily in Saudi Arabia and the UAE, it would not be enough to fully compensate for the loss of Iranian exports, especially if the Strait of Hormuz is blocked.

During the Iran-Iraq war in the 1980s, the Strait of Hormuz was mined, and this tactic could be used again, leading to a full closure of the waterway. While such an event has never occurred before, its possibility raises alarm for global energy markets. Oil traders and analysts are now closely monitoring the situation, with some warning that even a brief closure of the Strait could be catastrophic.

Iranian officials have also been engaged in discussions with Gulf neighbors, seeking to navigate this crisis diplomatically. However, the threat of military action looms large, and any escalation could further destabilize global oil markets. With tensions remaining high, the focus is now on how the situation will unfold in the coming days and weeks.

 #OilPrices #MiddleEastTensions #GlobalSupplyCrisis #BrentCrude #EnergyCrisis

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