Oil spikes 13pc after Iran attacks, analysts warn Brent could hit US$100

NEW YORK, March 3 — Oil and gas prices surged yesterday following Israeli and US strikes on Iran and retaliation by Tehran that forced shutdowns of oil and gas facilities across the region and disrupted shipping in the crucial Strait of Hormuz.

A prolonged conflict in the Middle East could lead to a sustained rise in oil prices, fuelling inflation that could undermine global economic growth and push up US retail gasoline prices as well.

Brent crude futures rose as much as 13 per cent to US$82.37 (RM323.61) a barrel, highest since January 2025, before settling up US$4.87, or 6.7 per cent, at US$77.74 a barrel. The contract surged in post-close trading after Iran’s Revolutionary Guards late yesterday said they would set fire to any ship attempting to transit the Strait of Hormuz.

US West Texas Intermediate crude closed at US$71.23, up US$4.21, or 6.3 per cent. The benchmark at one point gained more than 12 per cent to US$75.33, highest since June.

The initial surge in oil prices was less dramatic than some analysts had predicted, but Iran’s retaliatory attacks on other key energy-producing countries like Saudi Arabia and Qatar fanned fears that a longer, protracted back-and-forth would risk additional supply disruptions.

“Key questions are how much supply will be lost, for how long, and how do major powers react?” said Daniel Yergin, vice chairman at S&P Global.

Yesterday, Saudi Arabia shut its biggest domestic oil refinery after a drone strike. Qatar halted production of liquefied natural gas and state-owned QatarEnergy was set to declare force majeure on LNG shipments. The widening Iran conflict also left 150 ships stranded at anchor around the Strait of Hormuz after a seafarer was killed and at least three tankers were damaged.

Disruptions to shipping

On a typical day, ships carrying crude oil equal to about one-fifth of global demand sail through the Strait of Hormuz along with tankers hauling diesel, gasoline and other fuels to major Asian markets including China and India. The waterway is also the conduit for about 20 per cent of the world’s liquefied natural gas.

JPMorgan said a three- to four-week squeeze on Strait of Hormuz traffic could force Gulf producers to shut output and push Brent above US$100.

Kenny Zhu, research analyst at Global X, said the North American energy complex was well positioned to hedge against disruptions should there be any lasting impacts on global energy trade.

The relatively muted response in US natural gas markets versus European and Asian benchmarks illustrates that point. Front-month natural gas futures rose 10.1 cents, or 3.5 per cent, to US$2.96 per million British thermal units yesterday.

However, the Dutch front-month contract at the TTF natural gas hub, the benchmark European price, settled up about 40 per cent at 44.51 euros per megawatt hour (MWh) on the Intercontinental Exchange. Asian LNG prices jumped almost 39 per cent yesterday with the S&P Global Energy Japan-Korea-Marker (JKM), widely used as an Asian LNG benchmark, at US$15.068 per million British thermal units (mmBtu), Platts data showed.

Oil supply outstrips demand

Global tensions have contributed to a 19 per cent rally in Brent this year, while WTI has gained about 17 per cent, even though the International Energy Agency and other analysts believe the market is well supplied, with extra output from producers such as the United States, Guyana and Opec+ expected to outpace global demand this year.

Opec+ agreed on Sunday to raise oil output by 206,000 barrels per day in April. Every Opec+ producer is essentially producing at capacity except for Saudi Arabia, RBC Capital analyst Helima Croft said.

Globally, visible oil inventories stood at 7.827 million barrels, enough for 74 days of demand, which is near a historical median, Goldman Sachs wrote in a note.

Average US retail gasoline prices crossed US$3 a gallon for the first time since November yesterday. Analysts expect the widening conflict to further increase prices in the coming days.

US ultra-low-sulphur diesel futures rose to a two-year high yesterday at US$2.90, gaining about 9 per cent, while gasoline futures rose about 4 per cent.

“While we do not know where these disruptions will end or how the conflict will ultimately resolve, the near-term result is likely to be heightened volatility in global energy markets and a potential rerouting of global oil and gas cargoes,” said Global X’s Zhu. — Reuters