Oil prices continued to soar on Monday as the Iran war intensified, threatening production and shipping in the Middle East and straining energy supplies worldwide.
The price of Brent crude, the international benchmark, briefly surged to $119.50 per barrel on Monday — its highest level since the summer after Russia invaded Ukraine in 2022. West Texas Intermediate, which is produced in the United States, also soared to $119.48 per barrel at one point.
Those prices fell to just under the $100 later Monday. But barrels of Brent and U.S. crude are still 36% and 42% more expensive, respectively, than they were before the U.S. and Israel launched the war against Iran on Feb. 28.
The conflict, now in its second week, is ensnaring countries and infrastructure critical to the production and transportation of oil and gas worldwide. And there's no end in sight. On Monday, Iran named Ayatollah Mojtaba Khamenei to succeed his late father as supreme leader — a new sign of defiance from the country's leaders as the U.S. and Israel continue heavy bombardment.
Fears of attacks have all but stopped tanker traffic in the Strait of Hormuz, a narrow waterway off Iran's coast where a fifth of the world's oil sails through on a typical day. Major oil producers in the region like Iraq, Kuwait and the UAE have cut production due to export constraints because they are running out of storage space. Iran, Israel and the U.S. have all struck oil and gas facilities since the war started, worsening supply concerns.
“The first week the crisis was a transportation issue, which could conceivably be resolved quickly," Jim Burkhard, vice president and global head of crude oil research at S&P Global Energy said in an analysis Monday. But production and storage concerns are increasingly piling up, he explained, and restoration “will be a massive technical exercise that could last weeks or more.”
The war's toll on civilian targets and the energy sector grew over the weekend as oil depots in Tehran smoldered following Sunday strikes by Israel. Meanwhile, across the Persian Gulf, nearby Bahrain accused Iran of striking a desalination plant vital to drinking water supplies. Bahrain's national oil company declared force majeure for its shipments after an Iranian attack set its refinery complex ablaze. The legal declaration releases the company of contractual obligations because of extraordinary circumstances.
The war has also disrupted critical supply chains. Roughly 15 million barrels of crude oil — about 20% of the world's oil — typically are shipped every day through the Strait of Hormuz, according to independent research firm Rystad Energy. The threat of Iranian missile and drone attacks has all but stopped tankers carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran from traveling through the strait.
Some energy experts warn all of this could contribute to higher oil prices in the near future. If the Strait of Hormuz, in particular, remains closed for only a few weeks oil and gas strategists at Macquarie Research said the price of crude could push to a $150 per barrel or higher. That would top previous peaks of around $147 reached just ahead of the 2008 financial crisis.
Others, however, expect disruptions to be more short-lived. Oxford Economics researchers predict prices will fall to an average of $80 a barrel for the quarter, but noted Monday that the “risk of a more prolonged crisis has clearly increased.”
In response to soaring prices, there has also been discussions of dipping into emergency oil stockpiles in the U.S. and elsewhere. But on Monday, the Group of Seven major industrialized powers said it had decided against using their strategic reserves, at least for now.
“We’re not there yet,” French Finance Minister Roland Lescure said after chairing a meeting of his G7 counterparts. Still, he told reporters in Brussels that the group was “ready to take necessary and coordinated steps in order to stabilize markets, such as strategic stockpiling."
On Saturday, President Donald Trump downplayed the idea of turning to America's Strategic Petroleum Reserve, maintaining U.S. supplies were ample and prices would soon fall.
Yet the surge in costs for oil and natural gas is still pushing fuel prices higher, cascading through a range of industries — and particularly travel and household energy spending for consumers. Experts like Burkhard note that Asian economies are especially vulnerable, due to the region's heavy reliance on imports from the Middle East.
Iran exports roughly 1.6 million barrels of oil a day, mostly to China, which has called for an immediate end to the fighting. Beijing may need to look elsewhere for supply if Iran’s exports are disrupted, another factor that could increase energy prices. In a briefing Monday, Foreign Ministry spokesman Guo Jiakun said China would "take necessary measures to safeguard its own energy security.”
South Korean President Lee Jae Myung also warned Monday of strict penalties for refiners and gas stations caught hoarding or colluding on prices, saying it would be wise to find alternatives to supplies that must travel through the Strait of Hormuz.
Across Southeast Asia, the spike in prices has led to long lines outside filling stations.
But price hikes are spreading worldwide. Higher energy costs can push overall inflation higher, straining household budgets and denting the consumer spending that is the dominant engine behind some big economies, including the U.S. Those worries have spilled into financial markets, pulling share prices sharply lower since the war began.
The U.S. is now a net exporter of oil, so it will “suffer less from a rally in Brent and WTI above $100” than Europe or Asia, FxPro chief market analyst Alex Kuptsikevich noted Monday. Still, he stressed that past rapid surges in oil prices have contributed to U.S. recessions.
Gas prices have already climbed for American drivers. On Monday, the average U.S. price of a gallon of regular gasoline rose to $3.48, up nearly 50 cents from a week earlier, according to AAA motor club. Diesel, used heavily in shipping, sold for about $4.66 a gallon, a weekly increase of more than 80 cents.
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This story has been corrected to show that the Israel-U.S. attacks on Iran started Feb. 28, not March 1.
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Kurtenbach reported from Bangkok. Associated Press journalist John Leicester in Paris contributed.
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