According to World of Petroleum and Bitumen (WPB), rising hostilities in the Middle East have unsettled global energy markets, yet oil prices have declined sharply despite the deepening geopolitical crisis. Following coordinated airstrikes by the United States targeting Iran’s nuclear enrichment infrastructure, Iran’s parliament expressed support for blocking the Strait of Hormuz—an essential route for international oil and LNG transportation.
The conflict, which originated with Israeli attacks on Iranian military positions, has intensified with the U.S. directly joining in by bombing Iranian nuclear facilities. This shift has escalated the confrontation into a broader and more dangerous phase, heightening concerns over regional and global energy security.
In retaliation, Iran launched multiple missiles at American military bases in Qatar. Reports indicated explosions over Doha, prompting Qatar to close its airspace indefinitely. The United Arab Emirates followed with a similar measure, halting all air traffic to mitigate further risk.
Despite these developments, oil prices experienced a surprising downturn. West Texas Intermediate (WTI) crude dropped below USD 70 per barrel, representing a decline of over seven percent. Bloomberg’s energy expert Javier Blas interpreted Iran’s missile response as limited and largely symbolic, contributing to the market’s restrained reaction. Oil shipments, including those from Iran’s Kharg Island, continue without interruption, and the Strait of Hormuz remains open.
While Brent crude saw a slight increase—rising to approximately USD 79 per barrel—this remains a modest gain compared to historical precedents. For instance, during the early days of Russia’s invasion of Ukraine in 2022, oil prices surged more than 17%, surpassing USD 110 per barrel within the first week. The current uptick appears to be driven primarily by increased transportation costs such as elevated shipping rates and insurance premiums, rather than fears of immediate supply disruptions.
Experts note that the market’s current stability may shift dramatically if the threat to vital energy corridors like the Strait of Hormuz intensifies or becomes prolonged. This narrow passageway, located between Iran and Oman, is considered the world’s most critical oil transit chokepoint. It facilitates the movement of roughly 21 million barrels of oil each day—accounting for about 21% of global petroleum liquid consumption and nearly 25% of all seaborne oil transport.
Energy analysts and market participants remain on alert, closely tracking further developments. Any escalation threatening the steady flow of oil through this strategic strait could reshape global supply dynamics and lead to significant price volatility in the energy sector.
By Bitumenmag
Oil, Petroleum, Price
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