Oil prices jumped to their highest level in months on Monday as Iran and Israel stepped up attacks in the Middle East, disrupting shipments from the region.
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Oil prices rose on Friday morning, erasing earlier declines as investors continued to assess the impact of the US-Iran war on global energy markets.
As of 5:47 am ET, the global standard Brent crude futures It added 2.2% to trade at $87.27 a barrel, hitting a fresh 52-week high. US West Texas Intermediate Crude Futures were last seen 3.8% higher at $84.08, paring earlier gains.
Crude oil prices
Prices fell overnight as investors continued to assess the impact of the US-Iran war on global energy supplies.
Crude prices are on track for their biggest weekly gain since Russia’s full-scale invasion of Ukraine in early 2022.
The spike comes as the US-Iran conflict spreads across the Middle East, disrupting energy production and halting traffic in the critical shipping lane of the Strait of Hormuz.
On Friday morning, the Financial Times reported that Qatar’s energy minister said the war in the Middle East could see Gulf energy exporters halt shipments within days. Saad al-Kaabi told FT that crude prices could reach $150 a barrel in the coming weeks if oil tankers cannot pass through the Strait of Hormuz.
Prices fell overnight after the US granted India, the world’s third-largest oil importer, a 30-day waiver to resume purchases of Russian oil. Washington had previously imposed 25% “penalty” tariffs on India for buying Russian crude, which were withdrawn last month. The pullback in prices came after news agency Reuters reported, citing an unnamed White House official, that the US Treasury plans to announce measures to curb fuel price hikes, including possible interventions in the oil futures market.
The average price of a gallon of regular gasoline jumped nearly 27 cents to $3.25 for the week through Thursday, according to data from US travel agency AAA.
The conflict between Iran and the US entered its seventh day on Friday. At a press conference on Thursday, US Defense Secretary Pete Hegseth said the US had “just begun to fight back”.
“Iran is hoping that we can’t sustain this, which is a really bad miscalculation,” he told reporters.
“There’s no shortage of American will here … If you think you’ve seen something, wait. The amount of combat power that’s still flowing, still coming, that we’re able to project on Iran, when you add our capabilities and the capabilities of the Israeli Defense Forces, is a multiple of what it is now.”
An increase in inflation?
“Contrary to consensus, I think higher energy prices could cause deflation for the US,” Atakan Bakiskan, chief US economist at Berenberg, told CNBC’s “Squawk Box Europe” on Friday.
“I mean obviously higher energy prices mechanically push up headline CPI inflation. But when you think about it, it reduces consumer purchasing power, which is bad for consumer sentiment. That means to pay for higher gasoline prices, consumers have to cut demand for other goods, right?” Bakiskan said.
“So, it can actually lower core inflation in that sense and the Fed’s own macro model is actually saying that,” he said.
(tags to translate)Oil & Gas
