By Antonio Di Giacomo, Senior Market Analyst at XS.com
The global crude oil market is experiencing one of its most tense moments since the 2022 energy crisis, driven by the escalation of the conflict in the Middle East and growing concerns about global supply security. During the early hours of Monday, crude prices moderated part of their previously strong gains after reports emerged about a possible coordinated release of strategic reserves by G7 countries aimed at stabilizing the market. Despite this moderation, oil prices remain elevated. Brent continues to trade near $96 per barrel, while West Texas Intermediate (WTI) is hovering around $91. Both contracts recently recorded gains of more than 30%, briefly reaching levels above $119 per barrel, the highest since 2022. The recent escalation of the conflict between the United States, Israel, and Iran has been the main trigger behind the volatility in energy markets. Over the weekend, attacks were reported against Iranian oil facilities, along with retaliatory actions targeting energy infrastructure and vessels in the Persian Gulf region, significantly increasing the perception of risk in international markets. One of the most sensitive points in the conflict is the Strait of Hormuz, a key maritime route for global energy trade. Approximately one-fifth of the world’s oil consumption passes through this corridor. Recent attacks and threats in the area have significantly reduced the movement of oil tankers, disrupting the normal flow of exports from major Gulf producers. Recent figures illustrate the magnitude of the disruption in crude transportation. While roughly 35 crude oil tankers normally depart daily from the Persian Gulf, only two have departed in recent days, intensifying fears of a prolonged disruption to global oil supply. In response to this situation, several producing countries have begun implementing measures to mitigate the risk of shortages. Saudi Arabia has begun offering additional crude cargoes in the spot market to offset potential supply deficits, while other Gulf producers are facing logistical challenges in storage, transportation, and maritime security. The surge in oil prices is already having ripple effects across the broader economy. In the United States, gasoline prices have begun rising again and are approaching
levels not seen in several years. This increase is raising additional concerns about potential inflationary pressures, particularly at a time when central banks are maintaining relatively restrictive monetary policies. Furthermore, the rise in crude prices is generating movements across global financial markets. Currencies of energy-importing countries have shown increased volatility, while equity markets are reacting cautiously amid the possibility of a new energy shock that could impact global economic growth. Analysts warn that if the blockade or disruptions in the Strait of Hormuz persist for several weeks, the market could face a supply shock similar to the one observed after the outbreak of the Russia–Ukraine war in 2022. In such a scenario, oil prices could rise to $130 per barrel to curb demand and rebalance the market. In conclusion, the crude oil market is currently highly sensitive to geopolitical developments. Although a potential release of strategic reserves by the G7 could provide temporary relief, the decisive factor will remain the evolution of the conflict in the Middle East and the security of maritime transport through the Strait of Hormuz. As long as uncertainty persists in the region, crude prices are likely to remain highly volatile and continue reflecting a significant geopolitical risk premium in global markets.
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