Oil price surges to highest since 2023

The escalating US-Israeli war against Iran is disrupting energy supplies from the Middle East

Oil prices hit a two-and-a-half year high on Friday as the escalating US-Israeli war against Iran disrupts energy supplies from the Middle East to global markets.

Global benchmark Brent crude futures were up over 8% to over $92 a barrel, while US West Texas Intermediate (WTI) rose over 11% to over $90, both highest since September 2023.

Commercial traffic through the Strait of Hormuz, a critical waterway between Iran and Oman that carries about one-fifth of the world’s oil exports, has come to a near-complete halt, according to Bloomberg.

Iraq, the region’s second-largest producer, has had to cut output due to an inability to export. Kuwait has reportedly begun cutting production at some oil fields after running out of storage. Iran’s own oil exports have effectively ceased.

Goldman Sachs warned oil could top $100 a barrel if the disruption continues. Qatar’s energy minister warned that oil could hit $150.

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Russian President Vladimir Putin said the shipping disruptions could open opportunities for Russia to expand energy exports. “Against this backdrop, we can look for new buyers who have lost supplies that previously moved through the strait,” he said, suggesting Moscow could redirect oil and gas shipments to alternative markets to replace Gulf flows.

Meanwhile, the US has granted India, a leading crude importer, a 30-day waiver to purchase Russian oil. The move is aimed at ensuring stability in the global oil market, according to US Treasury Secretary Scott Bessent.

Several EU politicians have stepped up calls to roll back Russia sanctions. In Germany, Sahra Wagenknecht, leader of the BSW party, has called for resuming imports of Russian oil to ease prices, while Alice Weidel, co-chair of the AfD, has urged an end to a one-sided reliance on the US and the Middle East for LNG.

READ MORE: The Middle East is on fire. Will this gulf become another oil haven?

Hungarian Prime Minister Viktor Orban, Slovak Prime Minister Robert Fico, and Italian Deputy Prime Minister Matteo Salvini have repeatedly condemned the bloc’s sanctions on Moscow, saying they hurt the EU’s economy.