The price of crude oil jumps as military tension strangles a vital artery
The markets opened this Sunday with a bang. Oil prices rose sharply following an escalation of attacks between the United States, Israel and Iran in the Persian Gulf. The immediate response of the brokers was clear: betting that supply from the region is going to become very complicated.
US West Texas Intermediate (WTI) surpassed $72 per barrel, a jump of about 8% since Friday. Brent, the international reference, did the same, reaching $79. It is not for less.
Why does an attack in the Middle East cost us more to fill the tank?
The key has a name: Strait of Hormuz. Through that narrow maritime passage, flanked to the north by Iran, some 15 million barrels of crude oil circulate per day. That’s almost 20% of the world’s oil.
“Approximately one-fifth of the world’s oil supply passes through the Strait of Hormuz, a vital artery for global trade,” explained Jorge León, senior vice president of Rystad Energy.
Sunday’s attacks included targets on two boats that were transiting precisely through that area. Every incident there is like turning a giant faucet a little tighter. If it closes, the world remains thirsty.
The reaction was immediate. Eight OPEC+ countries, including heavyweights such as Saudi Arabia and Russia, announced they will increase production in April. They promised about 206,000 extra barrels per day.
But analysts view that announcement with skepticism. What’s the point of producing more oil if you can’t get it out of the region.
“If flows through the (Persian) Gulf are limited, additional production will offer limited immediate relief,” León warned. “Access to export routes is much more important than publicly announced production goals.”
That is to say: promises on paper versus ships that cannot set sail. History usually favors the latter.
Added to this is another factor: Iran exports around 1.6 million barrels per day, mainly to China. If its sales are blocked, Beijing will have to look for crude elsewhere, putting further pressure on global prices.
The market’s memory is long. By mid-February, Tehran had already closed parts of the strait for what it called a “military exercise.” Each temporary closure is a dress rehearsal for what could be a total crisis.
As missiles streak across the Gulf sky, families around the world will feel the impact where it hurts most: at the gas pump. Experts are already warning: if this continues, prepare to pay more for both crude oil and its derivatives. Geopolitics has just lit the fuse.
