US crude prices touched $100 per barrel on Sunday evening as the US weighed military strikes on OPEC member Iran’s key oil export facilities on Kharg Island.
US crude Oil rose 1.68% to $100.37 a barrel by 6:04 pm ET. Brent International benchmark prices rose 2.15% to $105.36 per barrel.
President Donald Trump ordered strikes on Iranian military assets on Kharg Island on Friday. Trump said the strikes left oil infrastructure unscathed. But he warned that the US would consider striking crude infrastructure on the island if Iran continued to block the critical Strait of Hormuz.
US Ambassador to the United Nations Mike Waltz reiterated Trump’s threat to strike oil infrastructure on the island. According to JP Morgan, about 90% of Iran’s oil exports are shipped from there. Iran produced about 3.2 million barrels per day in February, according to OPEC data.
“They only intentionally hit military infrastructure,” Waltz said in an interview with CNN on Sunday. “And I certainly think they retain that option if they want to remove their energy infrastructure.”
US attacks on Kharg Island and Trump’s threat to strike Iran’s oil infrastructure signal a major escalation in the war, JPMorgan’s head of global commodities strategy Natasha Kaneva said in a note to clients on Friday.
Kaneva said a direct strike on Iran’s export terminal on the island would immediately cut half of its crude exports of 1.5 million bpd. He said it would trigger “severe retaliation” from Iran in the Strait of Hormuz or against regional energy infrastructure.
Iranian attacks on oil tankers in the Persian Gulf have already brought traffic through the strait, a key trade route to the global crude market, to a standstill. About 20% of the world’s oil supply passed through the narrow waterway before the war.
The closure of the strait connecting the Gulf to the world market has caused the largest oil supply disruption in history. Oil prices have risen more than 40% since the US and Israel attacked Iran three weeks ago. Brent closed above $100 for the first time in four years last week.
Prices are rising despite a decision by more than 30 countries to release 400 million barrels of stored oil to address a supply bottleneck. This is the biggest move in history. The US will release 172 million barrels from its Strategic Petroleum Reserve as part of the effort.
The Paris-based International Energy Agency, which is coordinating the effort, said on Sunday that Asian nations would begin releasing emergency oil supplies immediately. US and European countries will start releasing their stocks by the end of March.
US Energy Secretary Chris Wright said on Sunday that there is no guarantee that oil prices will fall in the coming weeks.
“There are no guarantees in wars,” Wright told ABC News in an interview. “I guarantee the situation would have deteriorated dramatically without this military operation to destabilize the Iranian regime.”
(tags to translate) Breaking News: Markets
