Global oil markets received an expensive reminder this week that geopolitics still matter
Global oil markets received an expensive reminder this week that geopolitics still matter. Crude prices surged past $90 a barrel, the highest since 2023 and the largest one-week jump on record, after the Iran strikes. Traffic in the Strait of Hormuz, the narrow waterway through which about 20 percent of the world’s oil passes daily, is clogged up. Tanker companies have begun avoiding it after vessels were damaged in Iranian attacks.
Since the fighting began, the price of US benchmark crude has risen more than $20 per barrel, while gasoline prices in the US have already climbed 32 cents per gallon. Iraq and Kuwait have already reduced production, and China has warned it may halt fuel exports.
The White House has tried to calm markets by easing sanctions on India’s purchases of Russian oil and offering US-backed insurance and naval escorts for tankers willing to cross the strait.
Rystad Energy estimates that if the strait remains closed for three weeks, as much as 15 million barrels per day could be shut in. Energy Secretary Chris Wright insists the disruption will last “weeks, not months.”
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