Oil prices surge on Middle East supply disruptions

Oil prices surged on Friday, reaching their highest level in nearly four years as Iraq declared force majeure on oilfields operated by foreign firms amidst escalating tensions in the Middle East.Brent futures for May increased by $3.54, or 3.26%, finishing at $112.19 a barrel. U.S. West Texas Intermediate crude futures for April rose by $2.18, or 2.27%, closing at $98.32. The more actively traded second-month U.S. crude futures settled at $98.23, up 2.8%.

Oil prices soar

Brent crude futures rose over $4 at one point during the trading session.

The ongoing conflict between the U.S. and Iran continues to impact oil supply, with attacks on energy infrastructure in Iran and retaliatory strikes targeting Saudi Arabia, Qatar, and Kuwait.

John Kilduff from Again Capital noted that the situation looks dire, with no immediate resolution to the crisis in sight.

Brent oil prices have surged nearly 8.8% for the week, while WTI experienced a slight decline of around 0.4% from the previous week’s close.

The spread between WTI and Brent has reached its widest in 11 years.

Market expectations indicate prolonged supply disruptions may follow the recent escalations in conflict.

Ole Hansen from Saxo Bank highlighted the enduring impacts on production levels.

U.S. President Donald Trump commented on the situation, stating there were no leaders left in Iran to negotiate with, as military operations continue.

Tensions between Israel and Iran escalated with new attacks reported, including a strike on an oil refinery in Kuwait.

U.S. Energy Secretary Chris Wright announced that lifting oil sanctions on Iranian cargoes could expedite supplies to Asia.

Wright also confirmed that releases from the U.S. Strategic Petroleum Reserve may occur in the upcoming months.

Strait significance

Analysts predict that oil prices will remain high as long as transit through the Strait of Hormuz is affected.

Approximately 20% of the world’s oil and LNG flows through the strait.