Brent crude jumped 10% to around $80 a barrel in over-the-counter trading on Sunday, oil traders said, while analysts had predicted prices could rise to $100 after US and Israeli strikes on Iran plunged the Middle East into a new war.
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The global oil benchmark has risen this year and hit $73 a barrel on Friday, its highest since July, on growing concerns about potential attacks a day later. Futures trading is closed for the weekend, Reuters reports.
“While military attacks alone support oil prices, the key factor here is the closure of the Strait of Hormuz,” said Ajay Parmar, director of energy and refining at ICIS .
Most tanker owners, oil majors and trading houses have suspended shipments of crude oil, fuel and liquefied natural gas through the Strait of Hormuz, trade sources said, after Tehran warned ships against using the waterway, which carries more than 20% of the world's oil.
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“We expect prices to open much closer to $100 a barrel and possibly exceed that level if we see prolonged disruptions in the strait,” Parmar said.
Middle Eastern leaders have warned Washington that a war with Iran could send oil prices above $100 a barrel, RBC analyst Helima Croft said. Rabobank analysts are a bit less optimistic, predicting prices will remain above $90 a barrel for the foreseeable future.
The Iranian crisis has also prompted governments and refiners in Asia to assess oil reserves and alternative shipping and supply routes.
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Kpler analysts said India could turn to Russian oil to offset potential supply losses from the Middle East.
Previously, “FACTS” wrote that Saudi Arabia and Israel lobbied for a US military operation against Iran.