Oil markets experienced volatility on Monday as traders weighed the impact of geopolitical tensions in the Middle East against the potential easing of US sanctions on Iran.
By 04:46 GMT, Brent crude futures had increased by $0.65 to $112.84 per barrel (bbl), while US West Texas Intermediate (WTI) rose by $0.84 to $98.75/bbl. Both marks had dropped by more than $1 earlier in the trading session, reported Reuters.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The price gap between Brent and WTI has extended beyond $13/bbl, a significant spread.
The situation in the Middle East has intensified, with US President Donald Trump threatening to destroy Iranian power plants if Tehran failed to fully reopen the Strait of Hormuz within 48 hours. This remark came less than a day after he mentioned plans to de-escalate the ongoing conflict, which is now into its fourth week.
International Energy Agency (IEA) executive director Fatih Birol described the crisis as “very severe”, comparing it unfavourably to the oil shocks of the 1970s.
Meanwhile, Iraq has declared force majeure on all fields developed by foreign oil companies, citing disruptions caused by military action near the Strait of Hormuz, which has affected the country’s crude exports, Reuters reported.
The Iraqi Oil Ministry confirmed that disruptions have pushed storage capacities to their limits and noted that the situation is under continual review.
Iraq’s Oil Minister, Hayan Abdel-Ghani, revealed that Basra Oil Company has reduced its production from 3.3 million barrels per day (bpd) to 900,000bpd.
The conflict has expanded beyond regional borders, with Iran responding to US and Israeli actions by targeting Gulf states hosting US military bases, while Israel has retaliated with attacks in Lebanon.
The IEA has begun releasing millions of barrels from its oil reserves to address the current disruptions.
After convening in early March, IEA member countries agreed to supply 400 million barrels worldwide. The release primarily involves crude oil, supplemented by refined products in Europe and increased production from the US, Canada and Mexico.
This marks the sixth instance of IEA collective action since its establishment in 1974, with previous interventions occurring in 1991, 2005, 2011, and twice in 2022.
The current disruption is considered to be the largest in the history of global oil markets, with resumption of stable shipping through the Strait of Hormuz deemed crucial for restoring normalcy.
