By Antonio Di Giacomo, Senior Market Analyst at XS.com
Crude oil prices recorded a sharp increase on Friday amid the escalation of the conflict between the United States, Israel, and Iran. This situation has raised concerns across global energy markets. The intensification of tensions in the Middle East has significantly increased the geopolitical risk premium in crude oil, leading investors to anticipate potential prolonged disruptions to global supply.
One of the most decisive factors has been the effective closure of the Strait of Hormuz, a key maritime route for global energy trade. Around 20% of the world’s oil consumption typically passes through this corridor, meaning that any disruption in the area has an immediate impact on international crude prices.
In this context, U.S. crude oil West Texas Intermediate (WTI) surged more than 13%, reaching levels around $92.60 per barrel, while Brent climbed above $94.60 after advancing more than 10%. The move reflects growing market concern about the possibility of a prolonged disruption in oil supplies coming from the Middle East.
The disruption to maritime traffic has effectively removed approximately 140 million barrels from the market, intensifying the search for alternative sources of supply. In this environment, the United States has gained prominence as a key supplier due to its production capacity and export infrastructure.
The rising demand for U.S. crude has also narrowed the price spread between Brent and WTI, as refiners and trading houses attempt to replace barrels normally supplied from the Persian Gulf. This shift in market dynamics has triggered an adjustment in global energy trade flows.
At the same time, several countries in the region have faced disruptions to their energy operations. Attacks on critical infrastructure, temporary refinery shutdowns, and logistical challenges in maritime transportation have increased the risk of shortages of crude oil and refined products in international markets. Analysts warn that if the conflict intensifies further and some Gulf producers suspend exports for security reasons, the impact on prices could be significantly greater. In a prolonged disruption scenario, oil prices could easily surpass $100 per barrel and potentially approach $150.
In response to the situation, the U.S. government is evaluating different measures to contain the impact on energy prices, including possible easing of access to crude stored on vessels or in strategic reserves. However, these measures could be ineffective if traffic through the Strait of Hormuz remains blocked. In conclusion, the crude oil market is experiencing one of the most tense periods in recent years, driven by geopolitical risks and potential disruptions to global supply. As long as the Strait of Hormuz closure continues to affect global energy flows, oil price volatility is likely to remain elevated, with the risk that crude prices could once again surpass $100 per barrel if the conflict in the Middle East escalates.
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