Oil prices rose by $2 per barrel shortly after Iran attacked Tel Aviv in response to its attack on Beirut, eroding hopes of an end to the 100 days long conflict. Israel and Iran traded attacks for the first time since the ceasefire in April.
U.S. crude futures were up $2.10, or 2.32%, at $92.64 per barrel as of 0013 GMT, while Brent crude futures rose $2.33, or 2.5%, to $95.42 a barrel. The hike erased most of the loses incurred after the prices had fallen on Friday amidst hopes of a de-escalation in the U.S.-Iran conflict.
The surge in the crude oil prices has been backed by the recent attacks on Israel after it attacked Tehrans’ ally Hezbollah in Beirut marking a violation of the ceasefire. Re-opening of the Strait of Hormuz is skeptical after the renewed attacks. The waterways which is a crucial passage for energy transit remains close for a long time. Nearly 20% of the global trade passes through the channel making it a strategic pathway for nations.
Amidst the supply disruptions, OPEC+ has agreed to increase the supply by 188,000 from July onwards, marking its fourth consecutive hike since the closure of the strategic waters. However, according to experts, the hike will have minimal impact on the global disruptions as most of the members are not able to meet the supply demand as Strait remains close.