Oil Prices Surge as US and Saudi Arabia Launch Joint Attack Against Iranian-Backed Groups

Oil prices surged by about US$3 per barrel on Wednesday following escalating tensions in the Middle East. The price increase came after the United States and Saudi Arabia launched a joint attack against Iranian-backed groups in Iraq, accusing them of being behind a recent drone attack on Saudi oil facilities.

Iran warned that blaming Tehran for the attack was a 'big miscalculation'. The US military also foiled an Iranian surprise attack on American forces in the region. Tensions have put pressure on traffic in the Strait of Hormuz, with only five commodity carriers crossing the line on Tuesday.

Oman is offering a plan to manage the route backed by Gulf states, including voluntary levies on passing ships. However, Iran rejected the joint management of the Strait of Hormuz by regional countries.

According to DBS Bank Energy Research Head Suvro Sarkar, Brent prices are expected to move sharply in the range of US$80 to US$100 per barrel in the near future due to the conflict in the Middle East. The latest escalation came after US President Donald Trump signaled a return to diplomacy this week.