Oil Hits $80 Amid Middle East Tensions, Hormuz Strait Risk

Oil Hits $80 Amid Middle East Tensions, Hormuz Strait Risk

Oil prices climbed to $80 on international markets on Friday, driven by investor concerns over an escalating conflict in the Middle East and potential disruptions in oil transport through the Strait of Hormuz.

In London, the barrel price this afternoon surpassed Thursday’s closing by $2.21, reaching $79.62. Meanwhile, in the American market, a barrel traded $2.13 higher at $74.15.

This week, the crisis in the Red Sea has jolted the market. Last year, Yemen’s Houthis, known as Ansar Allah, started attacking commercial ships linked to Israel in the Bab al-Mandab Strait, marking the Red Sea’s entrance. They aimed to support Palestinian Hamas against Israeli armed forces in the Gaza Strip.

In response, the United States of America (USA) and Britain launched attacks on Yemen’s military targets associated with the group from Thursday night into Friday. Hence, this escalation has heightened fears in the oil market about the potential spread of the Israel-Hamas conflict across the region, disrupting supplies.

Iran Seizes Tanker, Oil Route Threatened: Global Tensions Rise

The Strait of Hormuz, under Iran’s control, serves as a critical juncture in Middle Eastern traffic routes. On Thursday, the Iranian navy captured a tanker transporting Iraqi crude oil to Turkey, south of the Strait.

According to ING analysts, over 20 million barrels of oil, about a fifth of global consumption, pass through the Strait of Hormuz daily.

Regarding the situation, US President Joe Biden stated that the “targeted strikes” in Yemen send a clear message: the US and its partners will not tolerate attacks on their personnel or allow threats to freedom of navigation.

A Houthi spokesperson countered by vowing to continue targeting ships bound for Israel.

Furthermore, Saudi Arabia, a leading oil exporter, urged restraint and cautioned against escalation, expressing significant concern about the unfolding events.

Moreover, the Organization of the Petroleum Exporting Countries (OPEC) reported a slight decrease in its members’ oil basket price to $78.88 per barrel on Thursday.