Huge jump in prices
When the markets resumed trading on Sunday, the price of Brent crude, considered the international standard, reached $ 107.97 per barrel. This is 16.5 percent more than Friday. At the same time, the price of West Texas Intermediate crude oil produced in America also crossed $ 106.22 per barrel, which is 16.9 percent more than Friday. These prices may fluctuate as market trading continues. This jump was seen only last week, when the prices of American crude increased by 36 percent and the prices of Brent crude increased by 28 percent. The war is now in its second week and has engulfed areas that are vital to the production and movement of oil and gas through the Persian Gulf.
Danger looming on the Strait of Hormuz
According to an independent research firm, about 15 million (15 million) barrels of crude oil are shipped around the world every day. A large part of it passes through the Strait of Hormuz. This strait is near Iran and it transports oil and gas from countries like Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, United Arab Emirates and Iran. But due to the threat of missile and drone attacks from Iran, tankers are now reluctant to take this route.
Production cuts and supply concerns
Due to decline in oil exports and filling of storage tanks, countries like Iraq, Kuwait and United Arab Emirates have reduced their oil production. Additionally, Iran, Israel, and the United States have also attacked oil and gas facilities since the war began, further increasing concerns about oil supplies around the world.
Comparison with previous prices and economic impact
US crude futures were last above $100 a barrel on June 30, 2022, when it reached $105.76. At the same time, Brent crude was at $ 104 per barrel on July 29, 2022. This global increase in oil prices has become a matter of concern for the financial markets after the attack on Iran by Israel and America on March 1. This has raised fears that rising energy prices will fuel inflation and reduce the spending power of American consumers, who are the backbone of the economy.
Increase in prices of petrol and diesel
The price of a gallon (about 3.78 liters) of regular gasoline in the US reached $3.45 on Sunday, which is about 47 cents more than a week ago. The price of diesel has hovered around $4.6 a gallon, an increase of 83 cents from last week. The US Energy Secretary has assured that petrol prices will soon fall below $3 per gallon and this problem is of a few weeks, not months.
What did the experts say?
Some experts and investors believe that if oil prices remain above $100 per barrel, it could prove to be very harmful for the global economy.
Attacks and warnings in Iran
Iranian officials say four people were killed in Israeli strikes on oil warehouses and a terminal in Tehran early Sunday. Israel’s army says that Iran was using these warehouses as fuel to fire missiles. The Speaker of Iran’s Parliament has warned that the impact of the war on the oil industry will increase further.
