Global oil prices surged past the $100 (£74, AU$142) a barrel mark for the first time since 2022 as escalating military aggression in the Middle East continues to wipe 20m barrels of oil from the market each day.
Brent crude, the international benchmark, jumped 16.6% to $108.10 a barrel as the new week’s trading began in the Asia Pacific markets, the first time that market prices have soared above this key psychological threshold since Russia’s invasion of Ukraine.
The West Texas Intermediate (WTI) benchmark price of US crude also soared, rising 19.6% to $108.72 per barrel. Pre-market trading data put Wall Street on course to open lower on Monday.
The extraordinary spike in oil prices is “a very small price to pay for U.S.A., and World, Safety and Peace”, Donald Trump argued on Sunday, describing it as a “short term” consequence of the US-Israel war on Iran. They “will drop rapidly when the destruction of the Iran nuclear threat is over”, the US president claimed on social media.
Prices rose after a weekend of escalating conflict in the Middle East, during which Kuwait’s national oil company announced a “precautionary” cut to its crude oil production.
They returned to triple digits after the highest weekly gains since the Covid-19 pandemic six years ago, and included a $10 increase in the price of US crude on Friday alone.
“The grace period given by the market to the Trump administration expired at the end of last week,” according to Clayton Seigle, a senior fellow at the Center for Strategic and International Studies.
“A deficit of 20m barrels per day is hitting global [oil market] balances with no sign of relief. To the contrary, President Trump is demanding unconditional surrender, a very unlikely prospect. While observers may have initially thought his disregard for painful oil prices was a bluff, it’s now clear that it isn’t,” he said.
Overall, oil prices have rocketed by two-thirds from just above $60 a barrel at the start of the year. Prices had already risen in January and February, before accelerating after the US-Israeli attack on Iran just over a week ago, which has disrupted a vital trade route for Middle Eastern oil supplies through the strait of Hormuz.
Fears of a global oil shortfall were compounded late last week by Qatar’s energy minister, who predicted that if the war continued unabated all Gulf energy exporters would be forced to shut down production within weeks and oil would rise to $150 a barrel.
Oil storage facilities in Saudi Arabia, the United Arab Emirates and Kuwait are reaching their limits, meaning major oilfields may need to be shut down if crude cannot be exported via the strait of Hormuz to the global market.
Hundreds of tankers attempting to transit the strait have come to a halt after Iran’s Revolutionary Guards threatened to “set ablaze” any vessel using the trade route, which carries a fifth of the world’s oil and liquefied natural gas.
Seigle warned that exports of oil and gas from the Middle East would not resume “until shipowners, operators, and insurers feel sufficiently safe from the threat environment posed by Iranian warships and aircraft, missiles, drones, speedboats, and naval mines”.
The White House has suggested countermeasures such as rerouting Saudi crude via the Red Sea, drawing on emergency US crude reserves or extending government-backed insurance to shipping companies. However, Seigle added that this would not be enough to offset the loss of 20m barrels of oil a day “or anywhere in that ballpark”.
