Oil Surges After US-Iran Clash

By Julian Nabil

Oil prices Brent crude and US West Texas Intermediate (WTI) crude rose 1.9% to $78.4 and $75.2, respectively, per barrel as of 7:32 am AST Arabia. Both contracts rose over 3% earlier in the session, reaching five-month highs of $81.4 and $78.4, respectively, before paring back some of those gains. Oil prices rose after US President Donald Trump announced that American strikes had “obliterated” Iran’s main nuclear facilities over the weekend, joining an Israeli offensive in a significant escalation of Middle East tensions, as Tehran pledged to retaliate. In response, Iran's Press TV reported that the country’s parliament had passed a measure to shut the Strait of Hormuz, a key route for about 20% of the world’s crude supply. While Iran has previously issued similar threats of closing the strait, it has never acted on them, Reuters reported. Iran and Israel traded air and missile strikes early Monday, heightening global tensions amid anticipation of Tehran’s response to the US assault on its nuclear sites. “The ongoing geopolitical tensions serve as a strong driver for Brent prices to climb higher, with a surge toward $100 becoming likely and $120 per barrel appearing increasingly possible,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet, the Reuters report showed. On Friday, the Trump administration imposed new sanctions related to Iran, including measures targeting two Hong Kong-based entities, the US Treasury Department said. The sanctions apply to 20 entities, five individuals, and three vessels. Prices outlook

Goldman Sachs said in a Sunday report that Brent crude could briefly surge to $110 per barrel if oil flows through the key waterway were reduced by half for a month, Reuters reported. Supply would then remain 10% lower for the following 11 months, it added.

Big number Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), currently produces about 3.3 million bpd. source: Forbes Middle East