Oil prices jumped by 4% on Wednesday as the conflict between the United States and Iran intensified. Fresh overnight strikes by US forces raised fears of a bigger disruption to global oil supplies. Brent crude climbed above $94 per barrel, while US West Texas Intermediate traded close to $87. The latest increase also renewed concerns about rising fuel costs and inflation worldwide.
The latest tension centers on the Strait of Hormuz, one of the world’s busiest oil shipping routes. Speaking at the ASEAN Foreign Ministers’ meeting in the Philippines, US Secretary of State Marco Rubio accused Iran of delaying peace talks.
“The problem we’re having right now is that they’re not serious about talks,” Rubio said.
He added,
“If they’re serious, we’re serious. If they’re not, then we will do what is necessary to protect our interests and also the interests of our allies.”
Rubio also claimed Iran wants control of the Strait of Hormuz, warning that such a move would create “a very dangerous precedent” for the world.
Meanwhile, the US Central Command carried out its 11th straight night of strikes on Iranian military targets. The attacks focused on military operations centres, aircraft hangars, drone storage sites and logistics facilities.
According to the US military, the operation aimed to reduce Iran’s ability to threaten commercial shipping through the Strait of Hormuz. As a result, investors are becoming more worried about possible supply shortages and further increases in oil prices.
Market analysts believe the conflict could keep energy prices high in the coming weeks. Deutsche Bank said Brent crude has stayed above $90 per barrel for the first time in over a month, increasing fears of inflation and slower economic growth.
At the same time, ING warned that supply risks are also growing outside the Middle East. Russia’s CPC terminal has suspended oil shipments from Kazakhstan after attacks on tankers. If the disruption continues, Kazakhstan may cut oil production, adding fresh pressure to global oil prices.
