Oil prices rise over 15% on Monday

Oil prices rose more than 15 per cent on Monday to their highest levels since mid 2022 as supply cuts by major producers and fears of shipping disruptions intensified amid the expanding conflict involving Iran, Israel, and the United States.

Brent crude futures climbed $15.51, or 16.7 per cent, to $108.20 per barrel by 0642 GMT, while West Texas Intermediate crude gained $14.23, or 15.7 per cent, to $105.13. Earlier in the session, Brent and WTI surged to around $119 per barrel after jumping 27 per cent and 35.6 per cent respectively last week.

The rally reflected mounting concerns over tanker disruptions and security risks near the Strait of Hormuz, a vital shipping route through which roughly one fifth of global oil supply passes, leaving Asian buyers particularly exposed to Middle Eastern supply risks.

Prices eased from earlier highs after the Group of Seven finance ministers and the International Energy Agency discussed the possibility of releasing emergency oil reserves, while Saudi Aramco offered prompt crude supply through rare tenders.

Meanwhile, Iraq and Kuwait began cutting oil output, adding to earlier liquefied natural gas reductions from Qatar as the war disrupted shipments across the region. Analysts expect the United Arab Emirates and Saudi Arabia could also reduce production as storage capacity tightens.

Energy infrastructure across the region also faced disruptions. BAPCO in Bahrain declared force majeure following an attack on its refinery complex, while a fire broke out in the oil industry zone in Fujairah in the United Arab Emirates after falling debris.

Analysts warned that unless oil flows through the Strait of Hormuz resume soon, upward pressure on prices could persist for weeks or months as producers and shipping companies grapple with damaged facilities, disrupted logistics, and rising security risks.

Attribution: Reuters