The US-Israeli war with Iran shows no signs of ending soon and US crude oil topped $100 per barrel on Sunday despite efforts by the Trump administration and allies to slow rising prices.
As oil futures resumed trading at 6 pm ET, US crude oil jumped more than 2% to around $102 per barrel. Brent crude oil, the international oil benchmark, also jumped to $106 per barrel.
On Wednesday, the 32 countries that make up the International Energy Agency unanimously agreed to release a collective 400 million barrels of oil in the largest emergency release ever.
Lawmakers, investors and consumers all thought the move would cut prices and reassure markets. Oil prices fell below $80 a barrel after the announcement, before continuing their steady march.
Since the start of the war, US oil prices have risen nearly 50%. So far this year, US crude prices are up nearly 75%.
Retail gas prices have also skyrocketed. On Sunday, the national average price of unleaded gas was about $3.70 per gallon, up about 70 cents since the US and Israel launched wide-scale strikes on targets in Iran.
Retaliatory Iranian attacks across the region on oil tanker shipping, infrastructure and ports have fueled fears that the war could turn into a protracted regional conflict.
In the meantime, the critical Strait of Hormuz – through which more than 20% of the world’s oil supply must pass to reach global markets – will remain closed for the foreseeable future.
On Friday, the US intensified its military pressure on Iran, striking Kharg Island, a crucial outpost in the Persian Gulf where Iran exports about 90% of its oil.
Trump said the strikes had not affected the island’s oil infrastructure. “We might hit (Kharg Island) a few more times, just for fun,” he told NBC News in a telephone interview Saturday.
He said he was not yet ready to negotiate a ceasefire with Iran.
Trump said in the interview that he was asking “a number of countries that have been affected by Iran’s misbehavior” to help secure the strait.
The White House has dangled the prospect of naval escorts to protect the oil tankers for more than a week, with no details yet.
“We’ve never effectively shut down a major energy waterway,” Helima Croft, chief commodities strategist at RBC Capital Markets, told NBC News last week.
“The only way this crisis will go down is if we have some way to reopen the Strait of Hormuz and give the shipping companies confidence that their tankers won’t be attacked,” Croft said.
On NBC’s “Meet the Press” earlier Sunday, Energy Secretary Chris Wright said it could be several more weeks before military convoys are possible.
Wright was asked if the Strait of Hormuz was safe for ships right now. “No, no, it’s not,” he said. Making the passage of ships safe is “one of the objectives of ending this conflict,” he said.
Until the war with Iran ends, “we’re going to see some elevated prices,” Wright said.
West Texas Intermediate crude crossed the $100 mark Sunday evening, some analysts say, could be oil’s first stop on the path to even higher prices.
“The psychological level of $100 oil may be a short-term price target on the way to higher levels, as oil production shrinks as storage fills as tankers can’t be loaded,” long-term industry expert Andy Lipow said last week.
