Oil prices continue to rise as attacks by the United States and Israel against Iran have begun to seriously disrupt the flow of crude oil to key importers. The parties to the conflict announce further escalation of actions, and the largest oil importer in the world – China – is taking steps to save fuel, as Bloomberg writes.
Brent crude oil prices approached the level of $85. per barrel after increasing by a total of about 12% in the first three days of the week. American WTI crude oil cost nearly $78. per barrel.
Donald Trump expressed confidence in the effectiveness of the ongoing military operation, although at the same time he admitted that it is unclear how long military operations may last. The New York Post even wrote that during the conversation, the US president did not even rule out “boots on the ground”, i.e. a land invasion. In turn, Iran's Islamic Revolutionary Guard Corps announced the intensification of attacks in the coming days.
The crisis is starting to have a domino effect on the global energy system. The Chinese authorities have instructed the largest refineries to stop exports of diesel and gasoline. The decision is aimed at securing national needs in a situation of deepening market instability.
Other countries in the region are also deciding to take similar steps. At the beginning of the week, one of the large Indian refining companies informed customers about the suspension of exports of fuel products. In turn, Japanese refineries are appealing to the government to release some of the oil from strategic state reserves.
Strait of Hormuz. A key point on the world oil map
However, the market's greatest concerns concern the Strait of Hormuz – one of the key oil transport points in the world. The movement of tankers carrying oil and gas through this route has been almost completely stopped. In practice, this means blocking supplies of raw material from Iran and other producers from the Persian Gulf region, forcing some of them to limit production.
The conflict, which is slowly entering its second week, has shaken global energy markets and there is no prospect of a quick end to the conflict yet. Fighting has spread across much of the Middle East, driving up oil, gas and fuel prices as well as transport rates. More and more producers and countries dependent on imports of raw materials from the region are struggling with serious disruptions.
“If we see even one more successful attack on a tanker or oil infrastructure, or long-term supply disruptions, prices could skyrocket again” – said Priyanka Sachdeva, senior market analyst at the brokerage firm Phillip Nova, quoted by Bloomberg.
