Oil prices rise sharply in market trading after attacks in Middle East disrupt global energy supply

A map showing the location of the Strait of Hormuz.

NEW YORK — Oil prices rose sharply Monday as U.S. and Israeli attacks on Iran and retaliatory strikes against Israel and U.S. military installations around the Gulf sent disruptions through the global energy supply chain.

Traders were betting the supply of oil from Iran and elsewhere in the Middle East would slow or grind to a halt. Attacks throughout the region, including on two vessels travelling through the Strait of Hormuz, the narrow mouth of the Persian Gulf, have restricted countries’ ability to export oil to the rest of the world. Prolonged attacks would likely result in higher prices for crude oil and gasoline, according to energy experts.

West Texas Intermediate, the light, sweet crude oil produced in the United States, was selling for $72.79 a barrel early Monday, up 8.6% from its trading price of about $67 on Friday, according to data from CME group.

A barrel of Brent crude, the international standard, was trading at $79.41 per barrel early Monday, according to FactSet, up 9% from its trading price of $72.87 on Friday, at the time a seven-month high.

Higher global energy prices mean consumers will pay more for gasoline at the pump and have to shell out more for groceries and other goods at a time when many are already feeling the impacts of elevated inflation.

Roughly 15 million barrels of crude oil per day -- about 20% of the world’s oil -- are shipped through the Strait of Hormuz, making it the world’s most critical oil chokepoint, according to Rystad Energy. Tankers travelling through the strait, which is bordered in the north by Iran, carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE and Iran.

Iran temporarily shut down parts of the strait in mid-February for what it said was a military drill, which led oil prices to jump about 6% higher in the days that followed.

Against that backdrop, eight countries that are part of the OPEC+ oil cartel announced they would boost production of crude Sunday. The Organization of Petroleum Exporting Countries, in a meeting planned before the war began, said it would increase production by 206,000 barrels per day in April, which was more than analysts had been expecting. The countries boosting output include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.

“Roughly one-fifth of global oil supply passes through the Strait of Hormuz, a vital artery for world trade, meaning markets are more concerned with whether barrels can move than with spare capacity on paper,” said Jorge Leon, Rystad’s senior vice president and head of geopolitical analysis, in an email. “If flows through the Gulf are constrained, additional production will provide limited immediate relief, making access to export routes far more important than headline output targets.”

Iran exports roughly 1.6 million barrels of oil a day, mostly to China, which may need to look elsewhere for supply if Iran’s exports are disrupted, another factor that could increase energy prices.

However, China has ample strategic oil reserves and also could boost imports from Russia, analysts said.

Cathy Bussewitz, The Associated Press