Middle East War Escalation Pushes Global Oil Prices Higher

New Delhi: Oil prices climbed sharply in Asian markets on Monday and shares slid after United States and Israeli strikes on Iran heightened fears of a wider conflict in the Middle East and potential disruption to global energy supplies.  

What is the price?

Brent crude sharply jumped in early trading on Monday and then eased back. Brent climbed 7.5 per cent to $78.34 a barrel, while US crude surged 7.3 per cent to $71.88 per barrel. Gold rose 1.5 per cent to $5,358 an ounce.

What about the military action?

The military strikes by the United States and Israel on Iran showed no sign of easing. The recent US-Israel strikes targeted important locations inside Iran. Among the Iranians killed include Iran's Supreme Leader, Ali Khamenei, along with several senior officials.

Iran also responded with missile strikes against Israel and other Middle Eastern countries that have close ties with the US, including Bahrain, Kuwait, Qatar, and the United Arab Emirates.

A day following the death of the Supreme Leader Ali Khamenei, Israel on Sunday launched another wave of strikes on Tehran, and Iran also responded by firing more missiles, which threw the Middle East into a state of uncertainty.

What did Trump say?

President Donald Trump said that the military conflict could last for four more weeks, while posting that attacks would continue until US objectives were met.

Why are all eyes on Strait of Hormuz?

A major concern for oil traders is the situation in the Strait of Hormuz, which is one of the world's most important oil shipping routes. 

The Strait of Hormuz is a narrow entrance to the Persian Gulf through which around 15 million barrels of crude oil pass each day, where around a fifth of the world's seaborne oil trade flows.

Nearly 20 per cent of global oil consumption passes through Strait of Hormuz.

According to reports, Iran has attacked several vessels passing through the strait. And if the shipping is disrupted temporarily, global oil supplies could face serious interruptions.

Did OPEC+ agree to increase output?

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+ on Sunday decided in a recent meeting to increase oil production by 206,000 barrels per day in April, amid rising conflict concerns.