Crude Oil Prices Surge 3% to $84 Amid Growing Supply Concerns and Regional Tensions

Global Oil Markets: US-Iran Conflict Continues to Impact Crude Prices

Market Update: The escalating US-Iran conflict has disrupted crude flows to key importers, leading to a 3.26% increase in Brent crude prices to $83.99 per barrel, and a 3.70% increase in US West Texas Intermediate (WTI) crude prices to $77.42 per barrel. This marks the fifth consecutive session of gains for crude markets.

Supply Risks Persist: The conflict has raised concerns about the flow of oil through the Strait of Hormuz, with Iranian forces targeting oil tankers in the area. The UK Maritime Trade Operations reported explosions near a tanker off the coast of Kuwait. Additionally, Iraq, the second-largest crude producer in the Organisation of the Petroleum Exporting Countries (OPEC), has reduced its oil output by 1.5 million barrels per day due to limited storage capacity and the absence of an export route.

Global Impact: The conflict has led to a surge in demand for oil from strategic petroleum reserves, with Japanese refiners asking their government to release oil from these reserves. Chinese refiners have been instructed to suspend exports of diesel and gasoline, prioritizing domestic demand. Indian processors have also halted product exports, highlighting the direness of the situation.

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Market Outlook: Brokerage firm Shriram Wealth expects crude oil prices to move back towards $70 per barrel as tensions in the Middle East ease. However, other brokerages, including JM Financial, expect crude oil prices to jump to $90-$100 per barrel if the Strait of Hormuz is blocked for a prolonged period.