Oil and gas prices soared on Monday after the United States and Israel carried out strikes on Iran over the weekend that killed Iran’s supreme leader and other top officials.
The strikes prompted the Islamic Revolutionary Guard Corps to effectively close the Strait of Hormuz to maritime vessels, shutting down a key global route for transporting oil exports.
The strait serves as one of the world’s most important oil chokepoints, with nearly 20 million barrels of crude oil and other oil products passing through the strait daily, equal to 20% of global oil demand, according to the Energy Information Administration.
As of Monday morning, U.S. benchmark West Texas Intermediate prices rose 7.3% to $71.91 a barrel, while Brent crude, the international benchmark, climbed 8.4% to nearly $78.99.
The strikes aimed at Iranian military and nuclear infrastructures, resulting in the death of Iranian Supreme Leader Ali Khamenei. In retaliation, Iran has attacked several U.S. military bases, including in Israel, Kuwait, Oman, and Bahrain.
Wood Mackenzie analysts warned that nearly 15 million barrels per day of Gulf crude and product exports are under threat.
“Failure to quickly re-establish flows through the Strait of Hormuz could again drive prices well over US$100/bbl from Friday’s close under US$73/bbl (Brent),” they wrote.
The national average for prices at the pump is $2.99, according to AAA.
Energy markets are broadly feeling the impact of the conflict, with domestic natural gas futures rising as much as 7.2%.
IRGC ‘EFFECTIVELY CLOSED’ KEY SHIPPING LANE STRAIT OF HORMUZ, CHOKING OIL ROUTES
Qatar’s state-owned energy giant QatarEnergy announced Monday that it would end all liquefied natural gas production after an Iranian drone hit its facilities at Ras Laffan and Mesaieed.
Qatar is a significant global LNG supplier, sending more than 70% of its exports to Asia and 25% to Europe in 2022.
