Crude prices to hit $130/barrel this week: What's the reason?
What's the story
Crude oil prices have continued their upward trend, with Brent crude expected to hit $130 per barrel by the end of this week. The rise comes amid heightened geopolitical tensions and potential threats to Middle East energy infrastructure. Today, Brent crude futures rose by $1.27 or 1.2%, to $104.41 a barrel after gaining $2.68 in the previous session.
Supply disruption
US-Israeli strikes on Iran disrupt global oil supply
The US-Israeli strikes on Iran have prompted Tehran to suspend shipping through the Strait of Hormuz, disrupting nearly 20% of the world's oil supply. This is being described as the biggest supply shock on record. Both Brent and West Texas Intermediate crude contracts have jumped over 40% this month, hitting their highest levels since 2022.
Escalating tensions
Trump warns of more strikes, escalating tensions
US President Donald Trump has warned of more strikes on Kharg Island, which handles nearly 90% of Iran's oil exports. The warning comes after previous attacks on military targets there prompted a defiant response from Tehran, including threats of further retaliation. Iranian drones had attacked a major oil terminal in Fujairah in the UAE soon after the Kharg attacks.
International collaboration
US in talks with countries to secure energy shipping route
Trump has called on other countries to help protect the vital energy shipping route. He said the US is in talks with several nations about working together to secure it. Despite these efforts, Trump remains skeptical about Tehran's willingness to engage in any meaningful negotiation to end the ongoing conflict.
Market intervention
International Energy Agency plans record drawdown of oil reserves
The International Energy Agency has announced a plan to release over 400 million barrels of oil reserves into the market. This record drawdown is aimed at curbing price spikes caused by the Middle East conflict. Ponmudi R, CEO of Enrich Money, said WTI crude oil is stabilizing around $98-$100 after extreme volatility earlier last week, when prices briefly spiked toward $110-$119.