Crude Oil Hits Six-Week High as Iran Threatens Middle East Energy Assets

By Adedapo Adesanya

Crude oil rose to a six-week high on Monday ​as Iran vowed to strike energy infrastructure across the Middle East in response to further US attacks on its assets, the latest escalation ‌of a conflict that has sharply reduced oil supply from the region.

Brent crude futures soared by $1.03 or 1.1 per cent to $97.31 a barrel, while US West Texas Intermediate (WTI) crude was up by 1.3 per cent or $1.17 to $92.65 a barrel.

The US and Iran ​traded strikes on oil tankers and warships over the weekend, marking a major escalation of the war between the two countries that began when the U.S. and ​Israel struck Iran on February 28.

Iran’s Parliament Speaker is warning that if the US attacks Iran’s oil assets, Iran will retaliate by targeting American and Western energy interests in the Gulf.

It remains unclear exactly how much oil is making it through the Strait of Hormuz at the moment. US Energy Secretary Chris Wright claimed over the weekend that more than 9 million barrels per day of oil are being exported via water routes, with pipelines taking another four or five million.

An average of 10 commodity ships transited the Strait of Hormuz per day over the past 10 days, the lowest since May, data from analytics firm Kpler showed on Monday.

Meanwhile, Iran’s military has continued to describe the Strait as completely closed to vessel traffic, with the stated aim of ensuring not a drop of oil leaves the region.

Market analysts noted that the war has taken a heavy toll on global ​oil supply, forcing nations to burn through stockpiles to avoid deficits.

In the US, the largest oil producer and consumer, inventories of gasoline and distillate fuel are ​substantially below year-ago and five-year seasonal averages.

The United Arab Emirates (UAE) is building alternative routes for its energy exports and trade to ensure they ⁠are not “held ​hostage” by the war between the US and Iran.

The Organisation of the Petroleum Exporting Countries and its allies (OPEC) kept its oil output policy unchanged for ‌October at a meeting on Sunday as the producer group needs to agree on new quotas before deciding its next output steps.

The meeting of seven core OPEC+ members — Saudi Arabia, ​Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — comes as the Iran war continues to ​disrupt oil exports.

OPEC+ agreed to a production boost for September, completing a phased rollback ​of a 1.65 million-barrel-per-day supply cut first agreed in 2023. Despite the agreed production increases, ​the group still produces far below its targets because of the war.