Oil Prices Surge Today With Brent Crude Crossing $106

The global oil market is under considerable pressure from ongoing military conflicts in the Middle East. This have disrupted one of the world’s most significant global shipping routes. Recently Brent crude oil hit over $106.00 a barrel. Aclear indication of intensifying fears surrounding the closure of the Strait of Hormuz (which typically transfers an estimated 20% of the world’s total supply of oil).

It has become very clear to many analysts that world military tensions are extremely destabilizing for global energy. An exceptional cause of growing fears that global economies are entering downturns.

On Sunday, Brent crude oil became the first reference point to see its price rise above US $106.00 per barrel. Also, at $104.63 per barrel on Monday just before starting to decline slightly in price. So as of 4:30 GMT on Monday, Brent crude oil was approximately 1.5 per cent more expensive. Its price at the opening of trading that morning ($104.63 / bbl).

According to energy analysts, the significant increase in Brent crude oil has been driven by continuing disruptions of oil shipments through the Strait of Hormuz. This is the main shipping lane from the Persian Gulf to the global market.

Due to a dramatic fall in shipping volume, the global energy markets are starting to react to supply concerns. As such, the conversation about the price of oil and its relationship to global economies appears to be one of high interest and trending throughout much of the world news.

Trump Calls for International Collaboration

Trump asked all countries to work together to reopen the Strait of Hormuz. Also, create a safe passageway for trade vessels during a time of crisis.

Trump stated during an interview that global cooperation is critical for stabilising the global energy market. However, he also stated that if countries do not support his proposal, it could have negative effects on NATO’s future.

None of the specific countries mentioned by Trump (China, Japan, France, and the UK) have publicly committed to the naval aspect of this mission.

Iran Disrupts World Energy Supplies

Iran has stopped shipping in and out of the Strait of Hormuz due to military actions taken against them by the United States and Israel.

The International Energy Agency says this serves as one of the largest disruptions ever recorded to global energy supplies.

Since the start of this conflict, oil prices have climbed nearly 40%. Thereby increasing inflation and impacting fuel prices worldwide.

Shipping Activity Has Dropped Sharply

According to UK Maritime Trade Operations (UKMTO), the number of vessels moving through the strait has dropped dramatically in recent months.

On average, the waterway sees 138 vessel traffic daily. However due to increasing violence and ongoing conflict there will only be an estimated five vessels transiting through per day. Since the start of the war (February 28th), there have been at least 16 reports of commercial vessels being attacked in the region.

The Strait of Hormuz is sandwiched between Iran and Oman with the United Arab Emirates on its western boundary. It is making it one of the world’s most strategically important maritime transit routes.

U.S. Navy Possible Deployment

According to the Trump Administration, the U.S. Navy could ultimately be deployed to escort commercial vessels as they pass through the Strait of Hormuz. There are recommendations that this deployment will take place once there has been additional weakening of Iranian military presence in the area.

The markets continue to be shaken as uncertainty continues to linger over the region. With the issues facing the global oil supply and rising geopolitical tensions, circumstances surrounding the Strait of Hormuz are expected to remain in the trending news today and continue to be a major driver on the global energy markets.