Oil prices surpassed $100 a barrel on Sunday for the first time in more than three and a half years, as the Iran war hampers production and shipping in the Middle East.
The price of a barrel of Brent crude, the international standard, was at $107.97 after trading resumed on the Chicago Mercantile Exchange, up 16.5 percent from its Friday closing price of $92.69.
West Texas Intermediate, the light, sweet crude oil produced in the United States, was selling for about $106.22 a barrel. That’s up 16.9 percent from Friday’s close at $90.90. Both could rise or fall as trading in the market continues.
The increases came after the price of US crude oil rose 36 percent and Brent crude rose 28 percent last week. Oil prices have soared as the war, now in its second week, ensnared countries and places that are critical to the production and movement of oil and gas from the Persian Gulf.
According to independent research firm Rystad Energy, approximately 15 million barrels of crude oil (about 20 percent of the world’s oil) are shipped through the Strait of Hormuz each day.
Story continues below this ad.
The threat of Iranian missile and drone attacks has virtually prevented oil tankers from traveling through the strait, which borders Iran to the north, and transporting oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran.
Iraq, Kuwait and the United Arab Emirates have reduced their oil production as storage tanks fill up due to reduced capacity to export crude. Iran, Israel and the United States have also attacked oil and gas facilities since the war began, exacerbating concerns about supply.
The last time US crude oil futures traded above $100 per barrel was on June 30, 2022, when the price hit $105.76. For Brent, it was July 29, 2022, when the price reached $104 per barrel.
The global rise in oil prices since Israel and the United States attacked Iran on March 1 has rattled financial markets, raising concerns that higher energy costs will fuel inflation and lead to lower spending by American consumers, the main driver of the economy.
Story continues below this ad.
In the United States, a gallon of regular gasoline rose to $3.45 on Sunday, about 47 cents more than a week earlier, according to the AAA motor club. Diesel was selling for about $4.6 a gallon, a weekly increase of about 83 cents. Energy Secretary Chris Wright, speaking on CNN’s “State of the Union,” said U.S. gas prices would be back below $3 a gallon “before long.”
“Look, you never know exactly how long this will take, but worst case scenario, it’s a few weeks, not a month,” Wright added. If oil prices remain above $100 a barrel, some analysts and investors say it could be too much for the global economy to bear.
Iranian authorities said Israeli attacks on oil depots in Tehran and an oil transfer terminal early Sunday killed four people. Israel’s military said the tanks were being used by Iran’s military as fuel to launch missiles. Mohammad Bagher Qalibaf, speaker of the Iranian parliament, warned that the impact of the war on the oil industry would skyrocket.
Iran exports about 1.6 million (16 lakh) barrels of oil a day, mainly to China, which may need to look elsewhere for supply if Iran’s exports are disrupted, another factor that could drive up energy prices.
Story continues below this ad.
The price of natural gas also rose during the war, although not as much as that of oil. It was selling for about $3.33 per 1,000 cubic feet late Sunday. That’s 4.6 percent higher than its Friday closing price of $3.19, after rising about 11 percent last week.
U.S. stock index futures, a market indicator, fell late Sunday, pointing to Wall Street’s main indexes opening lower on Monday. The S&P 500 future fell 1.6 percent, while the Dow fell 1.8 percent. The Nasdaq Composite future fell 1.5 percent.
On Friday, the S&P 500 fell 1.3 percent and the Dow Jones plunged as much as 945 points before ending with a loss of about 450, and the Nasdaq sank 1.6 percent.
