Global oil prices have surpassed the $100 (£74) per barrel mark for the first time since 2022, as escalating military aggression in the Middle East continues to remove 20 million barrels of oil from the market each day.
Brent crude, the international benchmark, rose 12.2% to $104.05 a barrel as trading began in the new week in Asia Pacific markets, the first time market prices have soared above this key psychological threshold since Russia’s invasion of Ukraine.
Prices rose after a weekend of escalating conflict in the Middle East, during which Kuwait’s national oil company announced a “precautionary” cut to its crude oil production.
The price of oil returned to triple digits after the biggest weekly gains since the Covid-19 pandemic six years ago, and included a $10 rise in the price of US crude oil on Friday alone.
“The grace period granted by the market to the Trump administration expired at the end of last week,” according to Clayton Seigle, senior fellow at the Center for Strategic and International Studies.
“A deficit of 20 million barrels per day (mb/d) is affecting global (oil market) balances with no sign of relief. Instead, President Trump is demanding unconditional surrender, a highly unlikely prospect. While observers may have initially thought his disregard for painful oil prices was a bluff, it is now clear that it is not,” he said.
Overall, oil prices have soared by two-thirds from just over $60 a barrel at the start of the year. Prices had already risen in January and February, before accelerating after the US-Israeli attack on Iran just over a week ago, which disrupted a vital trade route for Middle East oil supplies through the Strait of Hormuz.
Fears of a global oil deficit were compounded last week by Qatar’s Energy Minister, who predicted that if the war continued unabated, all Gulf energy exporters would be forced to shut down production within weeks and oil would rise to $150 a barrel.
Oil storage facilities in Saudi Arabia, the United Arab Emirates and Kuwait are reaching their limits, meaning major oil fields may need to be shut if crude cannot be exported through the Strait of Hormuz to the global market.
Hundreds of oil tankers attempting to cross the strait were stopped after Iran’s Revolutionary Guard threatened to “set fire” to any ships using the trade route, which carries a fifth of the world’s oil and liquefied natural gas.
Seigle warned that Middle East oil and gas exports would not resume “until shipowners, operators and insurers feel sufficiently confident about the threat environment posed by Iranian warships and aircraft, missiles, drones, speedboats and naval mines.”
The White House has suggested countermeasures such as diverting Saudi crude through the Red Sea, tapping into U.S. emergency crude reserves or extending government-backed insurance to shipping companies. However, Seigle added that this would not be enough to offset the loss of 20 million barrels of oil per day “or anywhere in that range.”
