Oil & Gas

From a business perspective, oil markets experienced extreme volatility as traders reacted to supply disruptions across the Middle East. Brent crude surged about 27% to around $117.65 per barrel, while U.S. West Texas Intermediate (WTI) jumped over 28% to about $116.62, putting both benchmarks on track for their largest single-day increases on record. Earlier in trading, WTI climbed as high as $119.48 per barrel and Brent reached roughly $119.50, reflecting heightened panic buying. The surge was amplified by production cuts from Iraq and Kuwait as shipments through the Strait of Hormuz became increasingly difficult, while LNG output reductions from Qatar further tightened energy supply in global markets.

From an economic perspective, the sharp price spike signals the possibility of prolonged high fuel costs for consumers and businesses worldwide. Even if the conflict ends quickly, analysts warn that damaged infrastructure, disrupted logistics, and heightened shipping risks could keep oil prices elevated for weeks or months. Iraq’s crude production from its major southern oilfields has already dropped by about 70% to roughly 1.3 million barrels per day, as exports through the Strait of Hormuz remain blocked and storage facilities reach capacity. Rising fuel prices could increase transportation costs, push inflation higher, and strain economic recovery in energy-importing countries.

From a geopolitical perspective, the crisis underscores the strategic importance of the Strait of Hormuz, through which around one-fifth of global oil supply normally passes. The appointment of Mojtaba Khamenei as Iran’s new supreme leader following the death of Ali Khamenei signals continued hardline leadership in Tehran, reducing expectations of quick de-escalation. Ongoing attacks on oil infrastructure across the region and rising military tensions between Iran, Israel and the United States have heightened fears of prolonged disruption to global energy flows. As oil prices surge, political pressure is also mounting in the United States to release crude from the Strategic Petroleum Reserve to stabilize markets and ease the price shock facing consumers.