Brent crude jumped to $119.50 per barrel, and West Texas Intermediate rose even more – by about 31%.
Points of attention
- Oil prices have surged to $120 per barrel due to reduced production by major Middle East producers and the blockade of the vital Strait of Hormuz.
- The escalation of the military conflict in the Middle East has led to disruptions in oil supply chains, pushing global oil prices to a record high.
World oil prices have risen sharply to $120 per barrel
Global oil prices rose to $120 a barrel as most major producers in the Middle East cut output, the Strait of Hormuz remained virtually closed, and the US threatened to deepen the conflict that has upended energy markets.
Brent crude jumped 29% to $119.50 per barrel, the biggest intraday jump since April 2020. US West Texas Intermediate rose even more, by about 31%.
Kuwait and the United Arab Emirates have begun cutting production as storage facilities fill up quickly due to the blockade of the Strait of Hormuz. Iraq also began cutting production last week.
US President Donald Trump commented on the price increase, saying on his social media that the short-term price increase is a "very small price" for the security of the US and the world. According to him, prices will quickly decrease "when the threat of the Iranian nuclear program is eliminated."
Analysts warn that the disruptions could last longer than expected. According to Warren Patterson, head of commodity strategy at ING, prices are likely to continue to rise until oil flows through the Strait of Hormuz resume.
The conflict has already drawn more than a dozen nations into the conflict, and Washington has signaled its readiness to expand the military campaign. Trump also said the United States may consider striking new targets in Iran. In response, Iranian President Masoud Pezeshkian vowed not to back down.
Threats to energy infrastructure intensified over the weekend, with Saudi Arabia intercepting drones heading towards the 1 million barrel per day Shaybah oil field. Earlier, the kingdom was also forced to shut down the country’s largest oil refinery, Ras Tanura.
Analysts at JPMorgan Chase & Co. predict that production outages in the Middle East could exceed 4 million barrels per day by the end of next week as storage facilities fill up and logistics are disrupted. The region supplies about a third of the world’s oil.
Governments around the world are already reacting to rising prices. China has ordered its largest refineries to halt exports of diesel and gasoline, and South Korea is considering imposing oil price caps for the first time in 30 years.
In the US, gasoline prices have reached their highest level since August 2024, which could create political problems for the Trump administration ahead of the midterm elections.
