Brent Nears $79 as U.S.-Iran Tensions Fuel Supply Risk
Brent neared $79 on Monday as oil prices soared in reaction to U.S. and Israeli strikes on Iran, heightening the risk of a prolonged conflict in the Middle East.
Prices from the commodity market showed Brent crude is trading at $78.5 per barrel, up 7.5% from the previous close of $73.01. US benchmark West Texas Intermediate (WTI) increased 6.8% to $71.79 per barrel, compared with $65.35 in the previous session.
US President Donald Trump said Iran’s military command structure had been “eliminated” as a result of the attacks, adding, “War operations are currently continuing at full force and will go on until we achieve all our objectives.”
In a roughly six-minute video shared on his social media account, Trump assessed the joint US-Israeli strikes on Iran. He said hundreds of targets belonging to Iran’s Islamic Revolutionary Guard Corps (IRGC) had been hit and nine Iranian vessels destroyed. Trump also claimed that Iranian Supreme Leader Ayatollah Ali Khamenei had been killed.
Israel and the US launched military strikes on Iran on Feb. 28 while negotiations were ongoing between Tehran and Washington administrations.
Iran retaliated by targeting Israel as well as designated sites in several regional countries hosting US bases, notably Qatar, the United Arab Emirates (UAE) and Bahrain.
In addition to Khamenei, numerous senior officials were reportedly killed in the US-Israeli strikes. Iran’s Red Crescent said 201 people were killed and 747 others injured in the bombardments.
Meanwhile, UK Maritime Trade Operations (UKMTO) said the maritime security threat level in the Strait of Hormuz had been raised to “critical,” the highest risk level, after confirming multiple attacks on commercial vessels over the past 24 hours in the Gulf of Oman, near Musandam and along the UAE coast.
Following the attacks, reports emerged alleging that Iran’s IRGC had sent messages to ships intending to transit the Strait of Hormuz stating that “no vessel will be permitted to pass.”
Despite claims that these messages were broadcast to ship crews operating in the Gulf via the international calling channel VHF Channel 16, no official statement has been made confirming the closure of the Strait of Hormuz.
Some container ships were seen making U-turns to avoid the strait, while leading global container shipping companies suspended transits due to heightened security risks in the region.
Located at the mouth of the Persian Gulf, the narrow Strait of Hormuz carries around 15 million barrels of crude oil daily from Middle Eastern producers to global markets via the Gulf of Oman and the Indian Ocean. This volume accounts for roughly one-third of global seaborne oil exports.
On the other hand, a weekend decision by the Organisation of the Petroleum Exporting Countries (OPEC) to increase output limited further gains in prices.
Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman held an online meeting to assess global market conditions and outlook.
During the meeting, which addressed the additional voluntary production cut of 1.65 million barrels per day announced in April 2023, the countries highlighted “the stable global economic outlook and current healthy market fundamentals reflected by low oil inventories,” and decided to raise oil production by 206,000 barrels per day in April.
The countries also noted that voluntary production cuts could be partially or fully reinstated gradually, depending on market conditions. The group’s next meeting is scheduled for April 5. OPEC Oil Production Drops 135,000 barrels Per Day in January
