Crude prices top $100 a barrel as Iran war disrupts oil flows

Oil prices pushed above $100 a barrel again on Sunday, with both the global benchmark and the U.S. reference grade climbing after markets reopened, as the Iran war disrupted production and shipping routes in the Persian Gulf region.

Brent crude settled at $107.97 a barrel after trading resumed on the Chicago Mercantile Exchange. That marked an increase of 16.5% from Friday’s closing price of $92.69, according to the AP report. West Texas Intermediate, the light, sweet crude produced in the United States, was selling for about $106.22 a barrel, up 16.9% from Friday’s close of $90.90. Both contracts could rise or fall as trading continued.

The oil jump came after a surge during the prior week, when the U.S. crude price rose 36% and Brent climbed 28%, the report said. It linked the rise to war-related disruptions that have affected countries and places crucial to the production and movement of oil and gas from the Persian Gulf. With the conflict now in its second week, the report said, the disruptions have continued to rattle energy markets.

Rystad Energy, an independent research firm, estimated that about 15 million barrels of crude oil—about 20% of the world’s oil—typically are shipped every day through the Strait of Hormuz. The report said the threat of Iranian missile and drone attacks has “all but stopped” tankers from traveling through the strait, which borders Iran to the north and connects shipping lanes that carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran.

The AP report said Iraq, Kuwait and the United Arab Emirates cut their oil production as storage tanks filled because exports became harder. It also said Iran, Israel and the United States attacked oil and gas facilities after the war began on March 1, adding to supply concerns. It noted that the last time U.S. crude futures traded above $100 per barrel was June 30, 2022, when the price reached $105.76, and that for Brent the last time it traded above $100 was July 29, 2022, when Brent hit $104 per barrel.

The global climb since Israel and the U.S. attacked Iran on March 1 has rattled financial markets and raised worries that higher energy costs could fuel inflation and reduce consumer spending in the United States, described as a key engine of the economy. On Sunday in the U.S., AAA reported that a gallon of regular gasoline rose to $3.45, about 47 cents higher than a week earlier, while diesel was about $4.60 a gallon, up about 83 cents over the same weekly span.

Energy Secretary Chris Wright told CNN’s “State of the Union” that gasoline prices would return under $3 a gallon “before too long,” but he also said he could not give a precise timing. “Look, you never know exactly the time frame of this, but, in the worst case, this is a weeks, this is not a months thing,” Wright added. The report said some analysts and investors caution that if oil stays above $100 a barrel, it could be too much for the global economy to withstand.

In Iran, the report said Iranian authorities blamed strikes by Israel on oil depots in Tehran and a petroleum transfer terminal early Sunday for four deaths. The report said Israel’s military said the depots were used by Iran’s military for fuel to launch missiles, and that Mohammad Bagher Qalibaf, the speaker of Iran’s parliament, warned that the war’s impact on the oil industry would spiral.

The report said Iran exports roughly 1.6 million barrels of oil a day, mostly to China, and that China may need to look elsewhere for supply if Iranian exports are disrupted. It also said natural gas prices have climbed during the war, though not as sharply as oil; it reported gas at about $3.33 per 1,000 cubic feet late Sunday, which was 4.6% higher than Friday’s close of $3.19 after rising about 11% the previous week.

Finally, the report said U.S. stock index futures fell late Sunday, indicating Wall Street’s main indexes were set to open lower Monday. It reported that the S&P 500 futures were down 1.6%, the Dow’s fell 1.8%, and Nasdaq futures were down 1.5%, after Friday’s market selloff included an S&P 500 drop of 1.3% and a Nasdaq decline of 1.6%.