Middle East War: Oil Prices Surpass $100 per Barrel

Darwin, 09 March:

The ongoing conflict in the Middle East involving the United States, Israel, and Iran has significantly impacted the global energy market. International crude oil prices have surged to $108.77 per barrel, marking the largest single-day increase since the beginning of the pandemic in 2020.

According to a report by Al Jazeera, oil prices had already risen by nearly 28 percent last week. Due to the continuing conflict, shipping activity through the Strait of Hormuz—one of the world’s most critical energy supply routes—has nearly come to a halt. Various international reports claim that Iranian forces have attacked vessels attempting to pass through the strait.

The Strait of Hormuz is one of the most important energy transportation routes in the world. Commenting on the situation, Bruce Kasman, chief economist at JPMorgan Chase, said that a large portion of oil and natural gas from the Middle East flows to global markets through this route, and the global economy still relies heavily on this supply.

He added that in the short term, oil prices could reach around $120 per barrel. However, if the conflict de-escalates quickly, some stability may return to the market afterward.

Kasman also warned that without a clear and effective political solution, the situation could persist for a long time. In that case, the price of Brent Crude could remain relatively high at around $80 per barrel until mid-year.

He further stated that under such circumstances, global economic growth in the first half of the year could decline by about 0.6 percent on an annual basis. At the same time, consumer inflation could rise by about 1 percent, increasing the risk of a global economic slowdown or recession.