Oil prices rose above $100 a barrel on Sunday after major Middle East producers cut production as the crucial Strait of Hormuz remains closed due to the Iran war.
west texas intermediate It rose 17%, or $15.32, to $106.22 per barrel. global benchmark brent It rose 15%, or $14.28, to $106.92. U.S. crude oil soared about 35% last week, the biggest gain in futures trading since 1983. The last time oil prices exceeded $100 per barrel was after Russia invaded Ukraine in 2022.
Shortly after oil prices topped $100 at the start of trading Sunday night, President Donald Trump posted on Truth Social that higher “short-term oil prices” were a “very small price” for defeating Iran’s nuclear threat.
“Only a fool would think otherwise!” Trump added.
Kuwait, OPEC’s fifth-largest producer, announced on Saturday that it would preemptively reduce oil production and refinery output, citing “Iran’s threat to the safe navigation of ships in the Strait of Hormuz.” The state-run Kuwait Petroleum Corporation has not provided details on the scale of production cuts.
Production in Iraq, OPEC’s second largest producer, has virtually collapsed. Output from three major oil fields in the south fell by 70% to 1.3 million barrels a day, three industry sources told Reuters on Sunday. These fields were producing 4.3 million barrels per day before the Iran War.
And the United Arab Emirates, OPEC’s third-largest producer, said on Saturday it was “carefully managing offshore production levels to address storage requirements.” Abu Dhabi National Oil Company (ADNOC) said onshore operations continue as normal.
Gulf Arab states are cutting production due to a lack of storage space as oil barrels pile up with nowhere to go due to the closure of the strait. Tankers are reluctant to pass through the narrow waterway due to fears of Iranian attack. Approximately 20% of the world’s oil consumption is exported through the Strait.
WTI crude oil, 5 years
The war showed little sign of slowing down, despite President Donald Trump’s insistence that it was “already won.” According to reports, Iran has named Khamenei’s son Mojtaba as its new supreme leader. The United States and Israel killed Khamenei early in the war.
Energy Secretary Chris Wright said traffic through the strait would resume on Sunday after the US destroyed Iran’s ability to threaten tankers.
“It won’t be long before more regular shipping operations resume through the Strait of Hormuz,” Wright said in an interview with CNN. “We’re nowhere near normal traffic at the moment. It’s going to take time. But again, the worst case scenario is weeks, not months.”
