Oil prices soared as the United States and Israel continued their attacks on Iran Sunday night.
brent crude oil Prices hit a new 52-week high on Monday, jumping 9.3% to $79.40. west texas intermediate Prices also rose more than 9% to $73.10.
US President Donald Trump said the “overwhelming military offensive”, dubbed “Operation Grand Fury”, would continue until the US objective was achieved. Israel launched new attacks late Sunday against both Iran and Hezbollah targets in Lebanon, following Iran’s attacks on military and infrastructure targets across several countries in the region.
Brent crude oil.
As the United States continues to target Iran’s air defense systems and naval capabilities, global oil supplies have come into sharp focus.
Amrita Sen, founder and director of research at Energy Aspects, told CNBC on Monday that she expects oil prices to likely remain around $80 a barrel for some time.
Sen said it was unlikely that the Strait of Hormuz, through which 13 to 15 million barrels, or 20% of the world’s oil supply, would be completely closed. He added that the greater risk stems from one-off attacks on ships passing through the area.
Sen said the US and Israel have superior military capabilities that could ultimately neutralize Iran’s ability to completely block the strait, which is a key shipping route for oil-producing countries such as Saudi Arabia, the UAE, Iraq, Iran and Kuwait.
However, preventing isolated attacks on ships is even more difficult. “This is something we have been warning our clients about all along,” she said.
WTI.
Shippers are now being very cautious about entering ports after three tankers were collided last weekend.
“That’s the biggest question now – how are Asian refiners actually sourcing volumes from the Middle East?” Sen added.
He noted that Oman and some UAE power grids could bypass the strait, while Saudi Arabia had contingency plans to transport oil through an east-west pipeline via the Red Sea.
“But even if we could transfer the 5 million in other ways, about 10 is still stuck,” she added.
Sen added that oil prices could reach $100 if energy infrastructure is hit.
She added that “the risks are too high” when it comes to potential attacks on infrastructure.
