Middle East Turmoil Sets Stage for Higher Oil Prices

Oil prices may surge in the coming period due to ongoing military tensions in the Middle East, according to oil and energy expert Hashem Akel. The regional turmoil is placing pressure on global energy markets, raising shipping and insurance costs.

Akel, CEO of Al Mansheyeh Petrol Products Trading Company, stated that oil prices are directly linked to geopolitical developments in key energy-producing regions, particularly the Arabian Gulf, which holds approximately 20 percent of the world's oil and gas reserves.

He warned that continued tensions could push prices even higher, driven by increased risk premiums, transport, insurance, and shipping costs. The cost of a barrel of crude oil is just 50 to 55 percent of the final cost of petroleum products, while the rest goes to refining, transport, insurance, shipping, and commissions.

The Strait of Hormuz and the Bab el-Mandeb Strait are critical maritime routes that have raised concerns about threats to global supply chains and increased costs for shipping oil and raw materials.