Oil Prices Surge 20% Amid Ongoing US-Israeli War with Iran

Oil prices have surged by nearly 20% on Monday, reaching their highest level since July 2022. The increase is attributed to the ongoing US-Israeli war with Iran, which has led some major Middle Eastern oil producers to cut supplies and cause disruptions in shipping through the Strait of Hormuz.

Iraq and Kuwait have begun reducing oil output, while Qatar earlier reduced liquefied natural gas production due to the war's impact on shipping. Analysts predict that the United Arab Emirates and Saudi Arabia will also need to cut their output soon as they run out of storage space.

The conflict has caused Brent crude futures to rise by 19.8% to $111.04 a barrel, while US West Texas Intermediate (WTI) crude futures have increased by 18.2% to $107.40 a barrel. Daniel Hynes, senior commodity strategist at ANZ, said that prices have rallied due to reports of Middle East producers reducing output due to storage facilities filling up fast.

Iraqi oil production from its main southern oilfields has fallen by 70% to just 1.3 million barrels per day as the country is unable to export oil via the Strait of Hormuz, according to three industry sources. The appointment of Mojtaba Khamenei as Iran's new Supreme Leader has also accelerated buying, with commodity analysts predicting that WTI could rise to $120 and then $130 a barrel in a relatively short period.