Oil prices jumped around 15% on Monday to their highest point since July 2022 as escalating tensions between the US, Israel and Iran prompted major Middle Eastern producers to cut output, reported Reuters.
Iraq and Kuwait have have reduced their oil production, intensifying the existing cutbacks in liquefied natural gas (LNG) exports from Qatar.
By early Monday, Brent crude futures had risen by $15.51 or 16.7%, reaching $108.20 per barrel (bbl), while US West Texas Intermediate (WTI) crude futures saw an increase of $14.23, or 15.7%, to $105.13/bbl.
The escalation has also disrupted shipments through the Strait of Hormuz, which carries around 20% of the world’s daily oil supply, prompting some refineries to suspend operations and tightening regional supply.
The United Arab Emirates (UAE) and Saudi Arabia may also need to decrease their production soon due to limited storage capacity.
The conflict poses a risk of prolonged high fuel prices globally as supply chains face issues such as damaged infrastructure and heightened shipping risks.
Iraq’s southern oilfields have experienced a significant decline in production, which has decreased by 70% to 1.3 million barrels per day (mbbl/d). This is due to export limitations through the Strait of Hormuz, according to three industry sources cited by the news agency.
Last Saturday, Kuwait Petroleum Corporation began reducing oil output and declared force majeure for its shipments without specifying the extent of production cuts.
Meanwhile, Iran has continued its attacks on regional oil infrastructure.
Last week, a fire was reported in the UAE’s Fujairah oil zone caused by falling debris, although no injuries occurred.
Saudi Arabia’s Defence Ministry stated on X that it intercepted a drone targeting the Shaybah oilfield.
Over the weekend, fireballs and dense smoke clouds were seen over Tehran following coordinated air strikes as part of Operation Epic Fury. Fuel storage sites in the Iranian capital came under attack from Israeli and US forces, reported Al Jazeera.
The strikes hit several key facilities including the Aghdasieh oil warehouse in north-east Tehran, the Tehran refinery to the south, the Shahran oil depot in the west and another depot in Karaj.
Witnesses observed that oil from the Shahran depot had spilled onto surrounding streets.
The publication also reported that Iran’s oil distribution company, the National Iranian Oil Products Distribution Company, said four of its employees were killed in the attacks.
Meanwhile, US President Donald Trump commented that the conflict may only cease once Iran’s military and ruling authorities are defeated.
