By Agencies
Oil prices eclipsed US$100 per barrel for the first time in more than three and a half years Sunday as the Iran war hinders production and shipping in the Middle East.
The price for a barrel of Brent crude, the international standard, was at US$107.97 after trading resumed on the Chicago Mercantile Exchange, up 16.5 percent from its Friday closing price of US$92.69.
West Texas Intermediate, the light, sweet crude oil produced in the United States, was selling for about US$106.22 a barrel. That’s 16.9 percent higher than it closed Friday at US$90.90.
Both could rise or fall as market trading continued.
The increases followed the US crude price jumping by 36 percent and Brent crude rising by 28 percent last week. Oil prices have surged as the war, now in its second week, ensnared countries and places that are critical to the production and movement of oil and gas from the Persian Gulf.
Roughly 15 million barrels of crude oil – about 20 percent of the world’s oil – typically are shipped every day through the Strait of Hormuz, according to independent research firm Rystad Energy. The threat of Iranian missile and drone attacks has all but stopped tankers from traveling through the strait, which is bordered in the north by Iran, carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran.
Iraq, Kuwait and the UAE have cut their oil production as storage tanks fill due to the reduced ability to export crude. Iran, Israel and the United States also have attacked oil and gas facilities since the war started, exacerbating supply concerns.
The last time US crude futures traded above US$100 per barrel was June 30, 2022, when the price reached US$105.76. For Brent, it was July 29, 2022, when the price hit US$104 per barrel.
The global surge in oil prices since Israel and the US attacked Iran on March 1 has rattled financial markets, sparking worries that higher energy costs will fuel inflation and lead to less spending by US consumers, the main engine of the economy.
In the US, a gallon of regular gasoline rose to US$3.45 on Sunday, about 47 cents more than a week earlier, according to AAA motor club. Diesel was selling for about US$4.60 a gallon, a weekly increase of about 83 cents.
Energy Secretary Chris Wright, speaking on CNN’s “State of the Union,” said US gas prices would be back under US$3 a gallon “before too long.”
“Look, you never know exactly the time frame of this, but, in the worst case, this is a weeks, this is not a months thing,” Wright added.
If oil prices stay above US$100 per barrel, some analysts and investors say it could be too much for the global economy to withstand. (AP)
