Oil Prices Soar as Middle East Tensions Escalate
Oil prices have surged as tensions in the Middle East continue to escalate. On Saturday, US forces struck three Iranian oil tankers, including one near Iran's key oil export hub. The Strait of Hormuz, through which a fifth of the world's oil supply passes, has seen a significant decrease in shipping activity over the past 10 days.
US West Texas Intermediate crude gained 66 cents, or 0.72%, to $92.14 a barrel, while Brent crude futures rose 52 cents, or 0.54%, to $96.80 a barrel. Goldman Sachs has warned that Brent could climb to $120 a barrel if shipping disruptions through the Strait of Hormuz continue.
Analysts at JPMorgan estimate that every additional month of disruption could add around $7 to $8 a barrel to Brent prices, while Citi has raised its average Brent crude price forecast for the third quarter to $86 a barrel from $80. ANZ analysts have also increased their short-term Brent forecast to $95 a barrel.
The duration and impact of the disruption will be critical for oil prices. The US and Iran's actions have intensified fears of a prolonged disruption to Middle East oil supplies, with experts warning that prices could rise further if the conflict intensifies.