Oil prices continue to climb, hitting their highest level in nearly 2 years
The price of oil has been on a relentless surge driven by concerns over the ongoing Iran conflict and its potential to disrupt global crude supplies. This surge has seen West Texas Intermediate (WTI) rise by 6.8% to $86.57 per barrel, while Brent crude has jumped 4.7% to $89.44. Both benchmarks are trading near their highest levels since April 2024.
Tangible Disruption
The recent spike in crude prices can be attributed to the Iran conflict causing a halt in shipments of oil and liquefied natural gas through the strategically vital Strait of Hormuz. This waterway normally sees about 20% of global oil shipments pass through, making it a critical route for the energy market.
JPMorgan analysts noted that the market is transitioning from pricing pure geopolitical risk to dealing with tangible operational disruption, as refinery shutdowns and export constraints are starting to affect crude processing and regional supply flows.
Qatar’s energy minister has suggested that all Gulf energy exporters may shut down production within days, potentially driving Brent crude prices to $150 a barrel. This news prompted a more than 6% jump in WTI crude prices, pushing them above $86 for the first time since April 2024.
According to Oxford Economics, WTI crude has surged close to 30% since the start of the conflict and is up more than 55% from its January low. The number of vessels passing through the Strait of Hormuz has decreased significantly, reaching single-digit levels in recent days, as reported by the Joint Maritime Information Center.
Ryan McKay, senior commodity strategist at TD Securities, warned that Brent crude prices could surpass $100 per barrel next week if oil tankers continue to be unable to traverse the Strait of Hormuz.
Jump in Gas Prices
As a result of the soaring oil prices, the United States is experiencing a sharp increase in fuel costs. The national average gas price has surged by 32 cents per gallon in the last seven days, reaching approximately $3.31 per gallon. This marks the highest gas prices seen since August of 2024, according to GasBuddy.
