Oil prices surged above $116 per barrel after markets opened on Sunday, as Iran-backed Houthi militants fired missiles and drones at Israel, intensifying concerns over global supply disruption.
Brent crude, the global benchmark, rose by 3.3% to $116.25 per barrel, while US benchmark West Texas Intermediate (WTI) also climbed by 3%, reaching $103.
The rise comes as the US-Israel war against Iran enters its fifth week with no end in sight and no de-escalation, with President Donald Trump continuing to send mixed messages, advocating diplomatic outreach while backing it with increased military posturing,raising fears that the conflict could spill beyond West Asia and become a wider global threat.
With Iran effectively blocking traffic through the Strait of Hormuz, escalating hostilities between the three nations in the Red Sea, particularly around the Bab-el-Mandeb Strait area has led to greater fears of wider disruptions in shipping routes, as per Axios.
According to energy historian Daniel Yergin, the risk of a dual chokepoint disruption is now looking likely, and warned that the current rise in oil prices could increase significantly, and potentially turn into an all-out global energy crisis.
“If the Houthis step up their attacks… that will aggravate what is already the most severe oil disruption that we have seen in history,” he told Fox News.
The threat of a dual maritime energy blockade by Iran comes as more than 3,500 US troops, including roughly 2,500 Marines, have recently been deployed to the region, while Iranian officials have issued fresh threats against US forces and allies, warning that a land invasion will be met with a slaughter, and threatening to fully block two of the world’s busiest and crucial oil transit routes.
In the US, rising crude prices are breaking through the roof, with petrol prices rising up to $3.98 per gallon, approaching the $4 mark.
Representative Jim Himes criticised the administration’s handling of the crisis and said the higher prices only provided Tehran with increased strategic leverage. “Gasoline prices are up more than $1 a gallon.
They have realized, ‘Holy smokes, we’ve got a lot of leverage here,” CBS News quoted him as saying.
However, the strong US production – now exceeding 13m barrels per day – could helped mitigate the impact to some degree, with energy officials noting that without Washington’s massive output, the energy problem could have spiralled into a full-blown crisis, leading to a manifold increase in energy prices, in comparison to what they are currently.
Energy experts note that while the increased US domestic production has helped cushion the impact, the “sustained disruption in supply routes in West Asia could drive prices significantly higher if the conflict continues to escalate.”
