Oil prices are likely to continue rising when trading begins on Monday, as the U.S.-Israeli war with Iran enters its third week. This comes as oil infrastructure remains at risk and the Strait of Hormuz stays closed, marking the largest disruption to global oil supplies in history.
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U.S. President Donald Trump has threatened further strikes on Iran's Kharg Island, a major oil export hub, prompting a defiant response from Tehran, which vowed to intensify its retaliation.
Brent and West Texas Intermediate (WTI) futures have surged sharply, shaking global financial markets. Both benchmarks have risen by more than 40% since the beginning of the month, reaching their highest levels since 2022. This surge followed U.S.-Israeli attacks on Iran, which halted maritime traffic through the Strait of Hormuz—a corridor for approximately 20% of global oil supplies.
President Trump has urged China, France, Japan, South Korea, Britain, and other nations to deploy warships to secure this strategic waterway.
On Saturday, the United States bombed military targets on Kharg Island, followed quickly by Iranian drone attacks on a major oil terminal in the United Arab Emirates.
"This represents an escalation in the conflict," said J.P. Morgan analysts led by Natasha Kaneva. "Until now, targeting regional oil infrastructure had been largely avoided."
In addition to the Port of Fujairah in the UAE, analysts noted that Saudi Arabia's Ras Tanura export terminal and the Abqaiq oil processing facilities are among the highly vulnerable sites in the Gulf region.
An industry source based in Fujairah stated on Sunday that oil loading operations have resumed at the port. Fujairah, located on the Gulf of Oman just outside the Strait of Hormuz, serves as an outlet for about one million barrels per day of UAE's Murban crude, equivalent to roughly 1% of global demand.
The International Energy Agency (IEA) stated that global oil supply is expected to drop by 8 million barrels per day (bpd) in March due to the disruption of Gulf shipping. Middle Eastern producers have reportedly cut production by at least 10 million bpd.
Last week, the IEA agreed to an unprecedented release of 400 million barrels from member states' strategic reserves to combat soaring prices. Japan plans to begin drawing from its oil reserves tomorrow, Monday.
According to three informed sources, the Trump administration has rejected efforts by Middle Eastern allies to initiate diplomatic negotiations. Similarly, Iran has dismissed the possibility of any ceasefire before U.S. and Israeli strikes cease, dimming hopes for a swift end to the war.
Source: Reuters
