By Anietie anii-bassey
Global oil prices surged sharply this week, climbing to levels not seen in months as the war between the United States, Israel and Iran intensified and began disrupting one of the world’s most critical energy corridors.
The rapid rise in prices came just days after U.S. and Israeli forces launched large-scale strikes on Iranian targets, a military campaign that quickly escalated into a wider regional conflict. Within a week, missile and drone attacks had spread across several Middle Eastern countries, damaging infrastructure and raising fears that global energy supplies could face prolonged disruption.
Energy markets reacted swiftly. By Friday, U.S. benchmark crude had climbed to $90.90 per barrel, representing a dramatic increase of roughly 36 percent compared with prices only a week earlier. Brent crude, the international standard used to price oil worldwide, also surged, ending the week at $92.69 per barrel after jumping 27 percent.
The surge reflects mounting concern that a major portion of the world’s oil supply is at risk as fighting spreads across the region and maritime traffic in the Persian Gulf becomes increasingly dangerous.
At the center of the crisis is the Strait of Hormuz, the narrow passage connecting the Persian Gulf to the open ocean. The waterway serves as one of the most vital shipping routes in global energy trade, carrying roughly 20 million barrels of oil every day — about one-fifth of the world’s daily supply.
Since the conflict intensified, tankers carrying crude oil and petroleum products have struggled to pass safely through the strait, which lies along Iran’s southern coast. Shipping companies and insurers have grown increasingly wary of sending vessels into an area now threatened by missile strikes, naval confrontations and drone attacks.
As a result, dozens of oil tankers have been forced to remain anchored or divert their routes, effectively trapping millions of barrels of crude that would normally flow into international markets.
The interruption has been compounded by direct attacks on energy infrastructure throughout the region. Several oil refineries, gas processing plants and export terminals have either been damaged by strikes or shut down as a precaution.
Together, these disruptions have created a significant supply shortage that analysts say is driving prices higher with little sign of relief in the near term.
For consumers, the effects are already beginning to appear at gas stations and transportation hubs.
In the United States, the average price for a gallon of regular gasoline rose to $3.41 by Saturday, according to the AAA motor club. That represents an increase of about 43 cents compared with the previous week.
Diesel fuel, which powers trucks, buses and many industrial machines, climbed even more sharply. The national average reached $4.51 per gallon, roughly 75 cents higher than just seven days earlier.
For many drivers, the sudden increase has become another financial burden during an already difficult economic period.
“It’s crazy,” said Mark Doran as he filled up his vehicle in Middlebury, Vermont. “It’s not needed, especially at a time when people are already struggling. But with everything going on in the Middle East, it’s not surprising.”
Doran expressed skepticism that the conflict would end quickly, noting that past military confrontations in the region often lasted far longer than initially expected.
“I don’t think there’s been an end in sight to any Middle East conflict that’s been started by us,” he said. “So the idea that this will end quickly is hard to believe.”
Energy analysts say the price shock could intensify if the war drags on or expands further.
Earlier this week, President Donald Trump said U.S. military operations against Iran could last four to five weeks but emphasized that American forces have the capability to continue far longer if necessary. On Friday, the president also appeared to rule out negotiations with Tehran unless Iran agreed to unconditional surrender.
Such statements have reinforced expectations that the confrontation could persist for an extended period.
“The more news we get, the more it seems like this is going to last a really long time,” said Al Salazar, who leads macro oil and gas research at Enverus.
While American consumers are already feeling the impact, the situation is even more severe in parts of Europe and Asia that rely heavily on energy imports from the Middle East.
According to Claudio Galimberti, chief economist at the energy research firm Rystad Energy, diesel prices have doubled in some European markets since the conflict began. In parts of Asia, jet fuel prices have skyrocketed by nearly 200 percent, creating major challenges for airlines and cargo carriers.
Energy markets grew increasingly volatile throughout the week as Iran launched retaliatory strikes in response to the initial attacks. Among the most significant incidents was a drone strike targeting the U.S. Embassy in Saudi Arabia.
Iranian forces also struck a major refinery in Saudi Arabia and attacked a liquefied natural gas facility in Qatar. The damage temporarily halted the flow of refined petroleum products and forced the shutdown of a large portion of the global LNG supply.
Analysts estimate that the shutdown removed nearly 20 percent of the world’s liquefied natural gas production from the market.
“We keep seeing news of vessels being hit or refineries or pipelines,” Galimberti said. “The list is very long.”
Because of the damage and precautionary shutdowns, roughly nine million barrels of oil per day have effectively disappeared from global markets, he said. That sudden reduction has created what experts describe as an extreme supply deficit.
Even though the United States is now a net exporter of crude oil, Americans are not insulated from the impact of rising global energy prices.
Oil is traded on an international market, meaning that domestic production is still heavily influenced by global supply disruptions. When prices rise overseas, the cost of American crude rises as well.
In addition, increasing U.S. production cannot happen instantly. Drilling new wells, building infrastructure and ramping up output typically requires months.
“If you put more wells in the ground, there’s about a six-month lag before you get that production uplift,” Salazar explained.
Another complication involves the type of crude oil produced in the United States. Much of the country’s output is light, sweet crude, while many American refineries — particularly along the East and West coasts — are designed to process heavier, more sulfur-rich oil from overseas.
As a result, the U.S. continues to export some of its domestic crude while importing refined products such as gasoline.
Some Americans have already begun preparing for the possibility that fuel prices could rise even further.
Jerry Dalpiaz, a resident of Covington, Louisiana, said he began filling both his vehicles and spare gas containers the day news broke that the United States had launched military operations against Iran.
“I figured prices were going to go up,” Dalpiaz said.
While he believes he can manage the higher costs personally, he worries about people living paycheck to paycheck.
“I’m in a good financial position, so I can weather the storm,” he said. “But I feel sorry for my fellow citizens who are struggling. They still have to drive to work and take care of their cars, and they need some relief.”
The Trump administration announced a plan Friday aimed at stabilizing shipping activity in the Gulf region. The proposal would provide insurance coverage for commercial losses of up to $20 billion, intended to reassure shipping companies and encourage tankers to resume transporting oil through the area.
Officials hope the financial guarantee will restore confidence in maritime trade and help prevent further disruption to international commerce.
Some energy experts, however, say the deeper problem lies in the persistent security threats facing ships traveling through the Strait of Hormuz.
Amy Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University, said the shipping industry remains deeply concerned about potential attacks using drones, explosive boats or naval mines.
“The problem is that in the oil shipping world, people are worried about counterterrorism threats,” she said. “They’re worried about drones, weaponized boats and other attacks.”
Until there is a credible security solution, she added, insurers and shipping companies may remain reluctant to send vessels into the region.
Salazar said even if the strait were reopened tomorrow, maintaining long-term safety would remain a challenge.
“All it takes is one individual with a rocket-propelled grenade standing on the shore to hit a tanker,” he said. “That risk doesn’t just disappear overnight.”
For now, energy traders are bracing for continued volatility as the war unfolds, with the possibility that oil prices could climb even higher if key shipping routes remain threatened or additional infrastructure comes under attack.
Original article
Comments