Global crude oil prices saw a sharp increase on march 5, driven by escalating conflicts in the Middle East that are increasingly disrupting worldwide supply. Brent crude rose 5% to settle at 85,4 USD per barrel, marking its fifth consecutive session of gains. West Texas Intermediate (WTI) crude, the US benchmark, climbed 8,5% to trade at 81 USD, reaching its highest level since july 2024. WTI’s price surged faster than Brent’s amidst indications that Washington might intervene in the futures market to curb rising energy prices.

The primary cause of this market volatility is the near paralysis of shipping routes through the Strait of Hormuz, a critical choke point for global oil flow. Approximately 20% of the world's oil supply transits this strait, and its disruption has directly impacted oil and gas production in key Middle Eastern countries. Iraq, for instance, has reduced its oil output by 1,5 million barrels per day due to a lack of available storage, as tankers are unable to transport crude out of the region. Similarly, Qatar has halted its liquefied natural gas (LNG) production because its vessels cannot navigate the strait.

A vessel in the Strait of Hormuz on 2/3. Photo: Reuters

Analysts suggest that Kuwait and the United Arab Emirates (UAE) could be the next countries forced to cut their oil supplies as storage facilities rapidly fill up. John Kilduff, an analyst at Again Capital, commented on the situation: "With no ships moving through the Strait of Hormuz, prices will continue to rise. When countries are forced to reduce production, the recovery process will be prolonged because they cannot immediately restart maximum production."

Despite the escalating tensions and rising energy costs, US President Donald Trump stated on march 5 that he was not concerned about an increase in US gasoline prices stemming from a potential escalation of conflict with Iran. In an interview with Reuters, he emphasized that US military operations were the current priority. President Trump also expressed a desire for the US to be involved in selecting Iran's next leader.

The region continues to experience direct impacts of the conflict, with attacks on oil tankers reported in the Gulf on march 5. The Bahamas-flagged oil tanker Sonangol Namibe reported a punctured hull following an explosion near Iraq's Khor al Zubair port. The broader disruption has also led to several refineries in the Middle East, China, and India suspending their crude oil distillation operations. Data from vessel tracking firms Vortexa and Kpler indicates that around 300 oil tankers remain stranded within the Strait of Hormuz.

Ha Thu (according to Reuters)