Kamal Ghorui
Oil prices surged sharply on Tuesday, with Brent crude climbing above the $110 per barrel mark and US West Texas Intermediate (WTI) crude trading above $100, as supply concerns intensified amid the widening conflict in the Middle East.Brent crude rose $2.26, or about 2 per cent, to $115.04 a barrel in early trade, after hitting their highest level since March 19 in the previous session.US WTI crude gained $3.10, or around 3 per cent to $105.96 a barrel, marking its highest level since March 9.Oil prices have surged sharply this month, with Brent rising nearly 59 per cent in March, while WTI has jumped about 58 per cent, the most since May 2020, according to Reuters. The surge has been driven largely by disruptions linked to Iran’s effective closure of the Strait of Hormuz, a strategic narrow waterway that handles roughly one-fifth of global oil supply and a significant volume of liquefied natural gas shipments.Tensions escalated further after Kuwait Petroleum Corp said its fully loaded crude tanker, Al Salmi, capable of carrying up to 2 million barrels was struck in an Iranian attack at Dubai port. Authorities have also warned of potential oil spills in the region, further escalating concerns over supply disruptions.Adding to the volatility, Yemen’s Iran-aligned Houthi forces launched missile strikes targeting Israel over the weekend, raising fears of renewed disruption at the Bab el-Mandeb strait. It is another key maritime route linking the Red Sea and the Gulf of Aden and is vital for global trade between Asia and Europe.Analysts warn that simultaneous disruptions at both the Strait of Hormuz and the Bab el-Mandeb could severely impact global energy flows. “If the Houthis successfully resume a blockade of the Bab al-Mandab Strait, both of the world’s most critical energy arteries would be under simultaneous pressure. This ‘twin chokepoint’ crisis is a nightmare scenario for global supply chains,” said Tim Waterer, chief market analyst at KCM Trade.In response to the risks, Saudi Arabia has rerouted a significant portion of its crude exports through the Red Sea. Data from Kpler showed shipments to the Red Sea port of Yanbu surged to 4.658 million barrels per day last week, up sharply from an average of 770,000 barrels per day in January and February.Meanwhile, US President Donald Trump warned that Washington could target Iran’s energy infrastructure if Tehran does not reopen the Strait of Hormuz. Iran, however, has dismissed US peace proposals as unrealistic, even as the White House said talks between the two sides were continuing.Market participants remain wary, with analysts observing that there is little clarity on a potential resolution.“The markets do not see any offramp for the conflict as the two sides are very wide apart in terms of their demands despite the rosy picture that President Trump is painting,” said Edward Meir, an analyst at Marex.
