Oil prices record a sharp rise amid escalating geopolitical tensions and supply disruptions.
Global oil markets opened Monday with sharp gains following a dramatic escalation in hostilities between Israel and Iran that targeted key energy infrastructure, including refineries and storage facilities. The rising tensions have also forced several Gulf producers to partially or fully suspend output, while maritime traffic through the strategic Strait of Hormuz remains largely frozen.
Over the weekend, Israeli strikes reportedly hit a major refinery in the Iranian capital, Tehran. The attack triggered massive fires inside the facility, with local reports suggesting that leaking oil spread through open drainage systems, allowing the flames to extend across surrounding areas. Residents across the city described waking up to thick black smoke covering the skyline and unusual dark, sticky rainfall believed to be the result of chemical contamination.
Iran responded by launching strikes against the Haifa oil refinery, which also suffered fires following the attack. Additional Israeli operations reportedly targeted Iranian oil storage sites in other locations.
Tensions have also disrupted production across the Gulf region. Kuwait, the world’s fifth-largest oil producer, announced it had halted output after storage facilities reached capacity due to the suspension of exports.
Meanwhile, Iraq’s crude production has plunged sharply. Output has fallen to roughly 1.3 million barrels per day from approximately 4.3 million barrels per day previously, representing a drop of more than 70%.
Several other Arab producers have also reduced or suspended production as storage tanks fill up amid the ongoing closure of the Strait of Hormuz. Shipping companies have refused to send tankers through the narrow waterway due to fears of potential attacks. Iran’s Revolutionary Guard reportedly warned that any vessel attempting to cross the strait could be targeted until further notice. Roughly 20% of the world’s oil consumption normally passes through this critical chokepoint.
On the political front, former U.S. President Donald Trump claimed he had “won” following Iran’s announcement naming Mojtaba Khamenei as the successor to his father.
U.S. Energy Secretary Chris Wright stated that maritime traffic through the Strait of Hormuz could resume soon, suggesting that U.S. military action targeting Iranian storage facilities could help restore shipping routes.
In an interview with CNN, Wright said the disruption would not last indefinitely. He acknowledged that current shipping activity remains far from normal levels but indicated that the return to regular operations could take several weeks rather than months.
Market Reaction
Oil prices continued their steep climb amid the supply concerns. Brent crude traded around $106 per barrel at 01:20 a.m. Saudi time after briefly reaching $110 earlier in the session, marking a gain of more than 14%.
U.S. West Texas Intermediate crude also surged, trading near $106 per barrel after touching $111 earlier in the session, posting gains exceeding 17%.
