OIL prices surged to more than $119 a barrel yesterday, hitting levels not seen since mid-2022.
Prices rose as some major producers cut supplies and fears of prolonged shipping disruption gripped the market due to the expanding U.S.-Israeli war with Iran.
The Strait of Hormuz, through which roughly one-fifth of the world’s oil and liquefied natural gas typically passes, is virtually shut.
Yesterday’s prices compare with all-time highs of around $147 a barrel in 2008, according to London Stock Exchange Group data going back to the 1980s.
Also boosting prices is the appointment of Mojtaba Khamenei to succeed his father Ali Khamenei as Iran’s supreme leader, signalling that hardliners remain firmly in charge in Tehran a week into its conflict with the U.S. and Israel.
The war could leave consumers and businesses worldwide facing weeks or months of higher fuel prices even if the conflict ends quickly, as suppliers grapple with damaged facilities, disrupted logistics and elevated risks to shipping.
“Alternatives are limited, such as tapping strategic oil reserves, but in comparison to the potential magnitude of the supply disruption if the Strait stays closed longer, they are a drop in the ocean,” said Giovanni Staunovo.
— Reuters
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