The US-Israeli assault on Iran has sent shockwaves through global energy markets, with oil prices surging to their highest levels since 2022. Since the start of the conflict, US gas prices have jumped 74 cents a gallon, a 26.9% monthly gain, the largest since Hurricane Katrina.
The crisis centres on Iran's stranglehold over the Strait of Hormuz, through which roughly 20% of the world's oil supply flows. Tehran's near-total closure of the waterway to oil tankers has triggered what experts are calling the biggest disruption to global oil supply in history, sending crude prices spiking to nearly $120 a barrel.
With Iranian retaliatory strikes continuing to damage key regional energy infrastructure, and President Trump threatening further action against Iranian oil facilities, there are few signs that the standoff, or the price surge, will ease anytime soon.
Market reports suggest that the global oil benchmark Brent crude pared gains but was up 2.1 per cent to US$105.32 a barrel on March 17. US benchmark West Texas Intermediate crude rose 1.2 per cent to US$99.88.
Both contracts have surged more than 40 per cent in March to their highest since 2022, after the US-Israeli attacks on Iran prompted Tehran to halt shipping through the Strait of Hormuz, choking off a fifth of global oil supply in the biggest disruption ever.
Looking ahead, on March 16, several ING commodity strategists explained that US strikes over the weekend on Kharg Island raised supply concerns, as most of Iran’s oil exports pass through it.
While the strikes appear to have targeted military rather than energy infrastructure, they still pose supply risks, since Iranian oil is about the only oil moving through the Strait of Hormuz for now, ING added.
Over the weekend, Trump threatened further strikes on Iran’s Kharg Island, which handles about 90 per cent of its exports, after hitting military targets there, to spur a defiant response of more retaliation from Tehran.