Global Oil Market Update

Key Figures:

• $98.96: Settlement price of Brent futures, up 6.8% from previous day
• $94.77: Settlement price of U.S. West Texas Intermediate (WTI) crude, up 4.3% from previous day
• 6.8%: Daily increase in Brent futures
• 4.3%: Daily increase in WTI crude
• 35%: Increase in Brent and WTI prices since the Iran war began

Market Analysis: The global oil market experienced a significant surge on Monday, with Brent futures and WTI crude reaching their highest settlement prices since August 2022. The price increase was driven by concerns over supply disruptions due to the expanding U.S.-Israeli war with Iran, with Saudi Arabia and other OPEC members cutting supplies.

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Market Drivers:

• Saudi oil giant Aramco began cutting output at two of its oilfields, adding to reductions by other Gulf countries
• Iran's hardliners staged a show of force, which boosted oil prices
• Strait of Hormuz virtually shut, disrupting oil shipments
• G7 nations considering tapping strategic petroleum reserves to tame oil prices

Government Response: U.S. President Donald Trump is expected to review options to tame oil prices, including a possible joint effort with other countries to release crude from strategic reserves. Other options include restricting U.S. exports, intervening in oil futures markets, waiving some federal taxes, and lifting legal requirements that domestic fuel move only on U.S.-flagged ships.

Economic Impact: The Iran war is expected to have a significant impact on the global economy, with soaring energy prices potentially causing inflation to skyrocket and leading to weaker economic growth. Central banks may respond by boosting interest rates, which can slow economic growth and reduce energy demand.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline