Oil unlikely to hit $200 a barrel, U.S. energy chief says

Iranian oil technician Majid Afshari checks the oil separator facilities in Azadegan oil field, near Ahvaz, Iran. (AP / Vahid Salemi)

U.S. Energy Secretary Chris Wright said on Thursday global oil prices are unlikely to hit $200 a barrel even as crude tankers remained stalled in the Strait of Hormuz and the U.S. and Israeli war with Iran widened.

“I would say unlikely, but we are focused on the military operation and solving a problem,” Wright told CNN when asked if prices would reach $200 a barrel - a level prices could hit if the war continues to escalate, an Iranian official said on Wednesday.

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“Get ready for the oil barrel to be at $200 because the oil price depends on the regional security which you have destabilized,” Ebrahim Zolfaqari, the spokesperson for Tehran’s Khatam al-Anbiya military command headquarters, said on Wednesday.

Oil prices jumped six per cent to nearly $100 on Thursday as two tankers blazed in an Iraqi port after a hit by suspected Iranian explosive-laden boats.

The rise came despite more than 30 countries in the International Energy Agency announcing a day earlier the biggest-ever coordinated drawdown of global oil reserves of 400 million barrels, about 40 per cent of which will come from the U.S., the world’s largest oil producer.

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The war has forced Middle East Gulf countries to cut total oil production by at least 10 million barrels per day, about 10 per cent of world demand. The IEA said on Thursday that is the biggest oil supply disruption in the history of the global market.

Wright also told CNBC on Thursday that the U.S. Navy cannot escort ships through the Strait of Hormuz now but it was “quite likely” that could happen by the end of the month.

(Reporting by Susan Heavey Timothy Gardner and Katharine Jackson; Editing by Sharon Singleton and Michelle Nichols)