New York: The ongoing military conflict between between US-Israel and Iran resulted in sharp rise in oil prices on Monday as the strikes disrupted the global energy supply chain. The crude oil prices declined as traders believe that the supply of oil from Iran and other countries in the Middle East would slow or come to a halt. It may be noted that the oil supply has already been hit as attacks continue throughout the region and two vessels traveling through the Strait of Hormuz have also been hit. This has affected the supply chain.
Experts say that if the US and Israeli forces continue to attack Iran and Tehran responds with retaliatory strikes against Israel and US military installations around the Gulf, the crude oil and gasoline prices would shoot up.
West Texas Intermediate rate on Monday: USD 72 a barrel, a jump of 7.3 per cent. At the international standard, crude oil was trading at USD 78.55 per barrel, up 7.8 per cent from.
The rise in crude oil and gasoline prices would mean hike in prices of groceries and other goods, which raises the fear of elevated inflation.
Notably, the Strait of Hormuz is very crucial for international trade around 15 million barrels of crude oil per day are shipped through it. Countries such as Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran send their tankers filled with crude through the strait, which is bordered in the north by Iran.
It may be recalled that Iran had temporarily shut down parts of the strait in mid-February for a military drill, leading to a rise in crude oil prices.
“Roughly one-fifth of global oil supply passes through the Strait of Hormuz, a vital artery for world trade, meaning markets are more concerned with whether barrels can move than with spare capacity on paper,” Jorge León, Rystad’s senior vice president and head of geopolitical analysis, was quoted by AP.
“If flows through the Gulf are constrained, additional production will provide limited immediate relief, making access to export routes far more important than headline output targets.”
