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Global commodity markets are experiencing intense volatility as oil prices surge in response to escalating tensions linked to the war in Iran and production cuts by several key Persian Gulf producers.

 

The price of Brent crude, the main international benchmark used in Europe, has jumped sharply in recent trading. After rising by more than 16% to exceed $107 per barrel, prices climbed even further in early trading this Monday March 9, increasing by more than 25% to reach around $120 per barrel. These levels have not been seen since the Russian invasion of Ukraine.

 

US crude has followed a similar trend. The price of West Texas Intermediate (WTI) has also surpassed $100 per barrel, marking the first time it has crossed that threshold since 2022. The increase comes just a week after the United States became directly involved in the conflict with Iran.

 

The high prices are mainly due to rising anxiety about the situation in the Strait of Hormuz, the strategic shipping route between Iran and the United Arab Emirates through which roughly a fifth of the world’s crude oil supply passes.

 

The situation has been exacerbated by disruptions to production among several major oil exporters. Iraq, the second largest producer within OPEC, along with the United Arab Emirates and Kuwait, have halted pumping operations due to the impact of the conflict and the growing difficulty of storing and transporting oil while the route remains blocked.

 

Energy analysts warn that the closure of the Strait of Hormuz could have far-reaching consequences for global energy markets, including higher petrol prices at the pump for motorists and the knock-on effect of making all consumer products more expensive due to increased freight and production costs.

 

Sergio Ávila, senior analyst at IG, said, “The Strait of Hormuz is practically closed. What seemed like a theoretical threat is turning into a real energy crisis.”

 

Further uncertainty has been fuelled by political developments in Iran. The announcement that Motjaba Khamenei is expected to succeed his father as the country’s leader is widely seen as a sign that the conflict could drag on, increasing the risk of prolonged disruption to global energy supplies.

 

Industry figures have already begun warning about how high prices could climb if the blockade continues. In an interview with the Financial Times last week, Qatar’s Energy Minister Saad al-Kaabi said that if the Strait of Hormuz remained blocked for several more weeks, the price of oil could soar.

 

“If the Strait of Hormuz remained blocked for another couple of weeks, the price of a barrel of oil could reach $150,” he warned.

 

US President Donald Trump responded publicly to the spike in prices shortly after the news reached markets on Sunday, posting a message on his Truth Social platform in which he defended the economic consequences of the conflict.

 

“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY!” he wrote.