Costs could spike as oil prices jump from Iran conflict | World | News
Attacks throughout the Middle East has limited suppliers’ ability to export oil to the rest of the world. Traders were expecting the supply of oil from Iran and other parts of the Middle East to slow or grind to a halt, The Associated Press reported.
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About about 20% of the world’s oil, 15 million barrels of crude oil per day, is shipped through the strait between the Persian Gulf and the Gulf of Oman. It is believed to be the world’s most critical oil chokepoint.
Tankers traveling through the strait, which is bordered in the north by Iran, carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran.
Iran had temporarily shut down parts of the strait in mid-February for what it said was a military drill, which led oil prices to jump about 6% higher in the days that followed.
Prolonged attacks could result in drive up prices for crude oil and gasoline, energy experts believe.
According to FactSet, a barrel of international standard Brent crude was trading at $78.55 per barrel early Monday, March 2, up 7.8% from its trading price of $72.87 on Friday. It had reach a seven-month high on Friday.
Prolonged higher global energy prices could lead to consumers paying more for gasoline at the pump and shelling out more for groceries and other goods, at a time when many are already feeling the impacts of elevated inflation.
Eight countries that are part of the OPEC+ said they would boost production of crude Sunday.
The Organization of Petroleum Exporting Countries, in a meeting planned before the war began, said it would raise production by 206,000 barrels per day in April, which was more than analysts had been expecting.
The countries boosting output include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
Iran exports roughly 1.6 million barrels of oil a day, mostly to China, which may need to look elsewhere for supply if Iran’s exports are disrupted, another factor that could increase energy prices.
