After the joint United States–Israel attack on Iran, instability across the Middle East has intensified significantly. Iran has announced the closure of the Strait of Hormuz, one of the world’s most important energy supply routes. As a result, significant pressure has been created in the global energy market, according to Reuters.
The price of crude oil has risen by about 10 percent, reaching nearly $80 per barrel. Analysts fear that if the situation worsens, prices could hit $100 per barrel.
Approximately 15 million barrels of crude oil used to enter the global market daily through the Strait of Hormuz. A large portion of exports from major Middle Eastern oil-producing countries is transported through this narrow waterway.
With shipping effectively halted, the market could face a net shortfall of 8 to 10 million barrels of oil per day.
Ajay Parmar, Director at the energy and refining analysis firm ICIS, said that while oil prices rising due to military attacks is normal, the main concern is the closure of the Strait of Hormuz.
He said, “By the end of the week, oil prices could approach $100 per barrel. If the strait remains closed for a prolonged period, prices will rise further.”
Renowned energy research firm Rystad Energy said that as soon as markets open on Monday (March 2), oil prices could jump by at least $20 per barrel.
According to the firm, the suspension of shipping through the Strait of Hormuz is the primary reason for the price surge.
A $20 increase in oil prices would raise transportation costs, which would in turn affect the prices of essential goods. Analysts have warned that this could create renewed inflationary pressure worldwide.