Oil Prices Surge Again, Attacks on Facilities Heighten Risks
Oil prices rose on Monday (March 16th) as market attention returned to threats to energy facilities in the Middle East, despite US President Donald Trump's call for other countries to help secure the Strait of Hormuz, a vital route for global energy shipments.
The Brent contract rose US$2.73, or 2.7%, to US$105.87 per barrel at 07:30 GMT, after closing at US$2.68 on Friday. Meanwhile, WTI added US$1.65, or 1.7%, to US$100.36 per barrel, after also closing up nearly US$3. Both contracts have now surged more than 40% so far this month to their highest levels since 2022.
The rally remains supported by major supply disruptions after US-Israeli attacks on Iran prompted Tehran to halt shipping through the Strait of Hormuz, which normally carries about a fifth of global oil supplies. In the market's view, the closure of the waterway remains a major source of risk premium due to its direct impact on physical supply flows.
ING believes the weekend US attack on Kharg Island has heightened supply concerns, given that approximately 90% of Iran's oil exports pass through the facility. Although the attack was said to have targeted military infrastructure, not energy, the market still views the risk as high, as Iranian oil is currently practically the only oil still moving through Hormuz.
Regional risks also increased after Iranian drones struck a major oil terminal in Fujairah, United Arab Emirates, shortly after the attack on Kharg. Loading operations in Fujairah have reportedly resumed, but it remains unclear whether they have fully returned to normal. Fujairah itself is a channel for exports of approximately 1 million barrels per day of UAE Murban oil, equivalent to approximately 1% of global demand.
On the policy front, Trump said the US demands that other countries help protect the Strait of Hormuz and said Washington is in discussions with several parties to safeguard the waterway. He also stated that the US remains in contact with Iran but doubts Tehran is ready for serious talks. Meanwhile, the International Energy Agency stated that more than 400 million barrels of oil reserves will soon begin flowing into the market, a record stock release intended to stem the price surge caused by the Middle East war.
Source: Newsmaker.id
