Oil prices surged over the weekend, with Brent crude soaring 10% to around $80 per barrel, as reported by oil traders. Analysts are now forecasting the possibility of prices reaching $100 per barrel following U.S. and Israeli military actions in Iran that have escalated tensions in the Middle East.
The global oil benchmark has been on a steady rise this year, hitting $73 per barrel on Friday, marking its highest level since July. Concerns over potential attacks intensified over the weekend, although futures trading was closed.
Ajay Parmar, the director of energy and refining at ICIS, highlighted that the closure of the Strait of Hormuz is a crucial factor in supporting oil prices amidst the current geopolitical tensions. The suspension of oil and gas shipments through the Strait by major industry players has added to the market uncertainty, as more than 20% of the world’s oil passes through this strategic waterway.
Experts anticipate oil prices to open significantly higher, potentially surpassing $100 per barrel if the Strait remains closed for an extended period. Middle East leaders have cautioned that a conflict with Iran could push oil prices above $100, while analysts from Rabobank foresee prices remaining above $90 per barrel in the short term.
In response to the escalating situation, the OPEC+ alliance agreed to a modest increase in oil output of 206,000 barrels per day starting in April. However, the potential closure of the Strait of Hormuz could result in a substantial loss of crude oil supply, even with efforts to redirect flows through alternative routes.
Rystad Energy predicts a price hike of around $20, reaching approximately $92 per barrel once trading resumes. Countries in Asia, including India, are already exploring contingency plans, such as tapping into Russian oil supplies, to offset potential disruptions in Middle East oil shipments.