Oil prices experienced slight fluctuations following Monday’s surge, driven by escalating conflict in the Middle East. West Texas Intermediate crude traded marginally lower, hovering near $US71 a barrel, after a 6 per cent rally the previous session. Brent crude closed near $US78. The United States and Israel have reportedly intensified their actions against Iran, while Tehran has threatened to close the Strait of Hormuz, a vital chokepoint for global oil supplies.
According to CNN, the US is preparing a significant increase in attacks on Iran, targeting missile production, drone capabilities, and naval assets. In response, Ebrahim Jabbari, an adviser to Iran’s Islamic Revolutionary Guard Corps commander, stated on state television that Iranian forces would “set fire to any ship attempting to pass through” the Strait of Hormuz. These developments have sent ripples through global energy markets, which have already been significantly disrupted by the ongoing conflict.
The war, which began on Saturday, has spread across the oil-rich Middle East as Iran retaliates against Israel and countries hosting US forces. Saudi Aramco, a major player in the energy sector, halted operations at its Ras Tanura refinery following a drone strike. Saudi Aramco is the state-owned oil company of Saudi Arabia and is one of the world’s largest integrated energy and chemicals companies. Qatar also suspended liquefied natural gas production at its major export facility after an Iranian attack.
ANZ analysts, including Daniel Hynes, noted the conflict’s increasingly dangerous phase. Tanker traffic through the Strait of Hormuz has nearly stopped due to the elevated risks. The strait handles a fifth of the world’s oil and a similar portion of liquefied natural gas, with shipments originating from Iran, Saudi Arabia, and other regional producers destined for global markets. The potential closure of this critical waterway could have far-reaching consequences for the global energy supply.
