Oil prices rose Monday amid escalating supply concerns following U.S. strikes on Iran’s Kharg Island oil hub and calls from former President Donald Trump for allies to assist in reopening the Strait of Hormuz.
Rising Oil Prices and Middle East Tensions
Brent crude, the international benchmark, increased 1.8% to $104.98 per barrel during early trading. Renewed violence across the Middle East over the weekend further fueled anxieties regarding the conflict and its potential impact on global energy markets.
Trump stated on Saturday that U.S. strikes had “totally demolished” most of Kharg Island, adding that the military may strike the site “a few more times just for fun.”
Kharg, a five-mile-long coral island in the Persian Gulf located 27 miles from the mainland, serves as a crucial processing center for Iran, handling approximately 90% of the country’s oil exports.
While claiming to have avoided targeting oil and energy infrastructure on the island “for reasons of decency,” Trump asserted that only military targets were hit.
The decision to strike Kharg, previously largely untouched during the initial two weeks of the U.S.-Israeli operation, did little to alleviate concerns in global markets.
The Strait of Hormuz, a vital waterway through which roughly a fifth of international oil supplies typically pass, has been largely closed since the start of the crisis.
Trump claimed that “many countries” would send ships to help reopen the strait, though he did not specify which nations. He publicly urged France, Japan, South Korea, and China to participate in a “team effort” to protect ships from Iranian attacks.
The response to Trump’s request was largely muted. South Korea’s foreign ministry indicated it was “exploring various measures from multiple angles” to secure energy transport routes. UK ministers are developing plans to send minesweeping drones to the strait, while expressing concerns that deploying ships could escalate the crisis.
Oil prices exceeded $100 per barrel last week for the first time since Russia’s invasion of Ukraine four years ago, as the U.S.-Israel conflict triggered a market rally and increased fuel costs worldwide, simultaneously boosting shares in major oil companies to record highs.
Fuel costs have been a growing source of frustration, with the average U.S. fuel price reaching $3.70 per gallon on Sunday, a 62-cent increase from a month prior, according to AAA.
“I don’t give a shit about Iran. I don’t want to pay higher gas,” a Detroit resident told the Guardian last week while paying $3.49 per gallon.
Trump attempted to downplay the likelihood of sustained high fuel prices, stating, “I think they’ll go lower than they were before.” He added, “There’s so much oil, gas – there’s so much out there…But you know, it’s being clogged up a little bit. It’ll be unclogged very soon.”
Countries across Asia are grappling with the energy crunch, implementing measures such as fuel subsidies in Thailand and rationing in Bangladesh.
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