Crude Oil Prices Surge 10% Amid Escalating Tensions Over Iran Conflict

Global Oil Prices Rise Amid Ongoing Conflict in the Middle East

Brent crude jumped 10% to approximately $80 a barrel in over-the-counter trade on Sunday, as analysts predict prices could climb as high as $100 a barrel due to the disruption of Gulf oil flows following US and Israeli attacks on Iran.

The closure of the Strait of Hormuz, through which over 20% of global oil is moved, has led to a suspension of crude oil, fuel, and liquefied natural gas shipments by most tanker owners, oil majors, and trading houses. This has resulted in a potential loss of 8-10 million barrels per day (bpd) of crude oil supply, even after diverting some flows through Saudi Arabia's East-West pipeline and Abu Dhabi pipeline.

In response to the supply disruptions, the OPEC group of oil producers agreed to raise output by 206,000 bpd from April, a modest increase representing less than 0.2% of global demand. Meanwhile, Saudi Arabia and UAE have reportedly raised their exports to meet the increased demand.

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Rystad expects prices to rise by $20 to $92 a barrel when trade opens, while Barclays and RBC analysts predict prices could hit $100 a barrel. The ongoing crisis has also prompted Asian governments and refiners to assess oil stockpiles and alternative shipping routes and supplies.