Oil prices cross $90/barrel on indications West Asia conflict may be prolonged

NEW DELHI: Crude oil prices shot up sharply, reportedly after the US President Donald Trump sought what he called “unconditional surrender” from Iran, intensifying worries about a prolonged conflict that could disrupt global energy supplies. Crude Oil WTI Futures were 12.2 per cent up at $90.90 at the time of filing this report. It has seen its biggest weekly gain since April 2020, as per reports.

Escalating tensions in Iran and the wider West Asia region have intensified concerns over global crude oil supplies, with experts warning of sustained volatility that could potentially impact global energy sector, including India.

Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities said it seems that the ongoing conflict between the United States and Iran is likely to keep the prices elevated. “The war has significantly disrupted energy markets and heightened concerns about supply flows through the Strait of Hormuz, one of the world’s most critical oil shipping routes. Approximately 20% of global oil supply passes through this chokepoint, making it highly sensitive to geopolitical disruptions,” Sheth said.

The war between the United States and Israel against Iran has the potential to be the largest oil supply disruption in history if oil flows via the narrow Strait of Hormuz remain low or come to a halt, said Jim Burkhard, Global Head of Crude Oil Research at S&P Global Energy.

“Initially, energy infrastructure had not been targeted by Iran, but that has changed with attacks on facilities in Saudi Arabia and Qatar. This adds a critical further dimension to the shock wave hitting oil and gas markets, according to a new S&P Global Energy analysis,” Jim Burkhard said.

S&P Global Energy Commodities at Sea data shows that on March 1 only 5 oil tankers transited the Strait compared with around 60 tankers per day recently. (ANI)