Economy
Oil Prices Jump 7% as Middle East Conflict Escalates
By Adedapo Adesanya
Oil prices climbed about 7 per cent on Wednesday as airstrikes resumed in the Middle East, raising fresh worries about supplies.
Brent futures soared by $6.65 or 7.91 per cent to $90.74 a barrel, while the US West Texas Intermediate (WTI) crude gained $5.20 or 6.56% to trade at $84.46 a barrel.
The US and Saudi Arabia launched strikes on Iran-backed groups in Iraq on Wednesday, blaming them for drone attacks on Saudi oil facilities.
This came after the American military said it had averted a surprise Iranian attack on US troops in the region while Iran said it had fired on ships in the Strait of Hormuz and at American bases in Jordan.
In Egypt, explosions hit a natural gas loading port on the Mediterranean Sea, and British maritime security company Ambrey said a US-owned floating storage tanker there had been hit by a drone. Saudi Arabia had already begun rerouting crude exports through Egypt’s SUMED pipeline to bypass the Bab el-Mandeb chokepoint.
US President Donald Trump reiterated that the US would “hit Iran hard” following an attack on a US base in Jordan.
Iran-backed Houthis are also weighing imposing fees on commercial shipping through the Bab el-Mandeb Strait, and US-Saudi forces launched fresh strikes against Houthi positions in Yemen.
Reuters reported that China has held direct talks with the group to enable its tankers to sail through the region without being attacked.
Iran rejected a proposal from Oman to evenly share control of the lanes in the Strait of Hormuz, as it demands to control most of the critical oil and Liquified Natural Gas (LNG) chokepoint.
Meanwhile, the US Treasury Department said it has issued another round of Iran-related sanctions, taking aim at the country’s efforts to “monetise the Strait of Hormuz” with designations of 10 entities and eight more tankers.
Crude oil inventories in the US saw a decrease of 7.2 million barrels during the week ending July 24, according to new data from the US Energy Information Administration (EIA) released on Wednesday.
Figures from the American Petroleum Institute (API) that were released a day earlier, reporting that crude oil inventories had fallen by 3.296 million barrels in the period.
The Organisation of the Petroleum Exporting Countries and allies (OPEC+) is likely to halt oil output increases for three months starting in October, after the producer group completes the scheduled return of barrels following voluntary cuts.
