International oil prices jumped during early trading on Monday, with Brent crude oil crossing the $90 per barrel mark. This sudden price rise comes right after military conflict between the United States and Iran grew much worse, raising fears that energy supplies passing through the Middle East could face long delays.
Market worries grew sharper after the United States military carried out a series of air strikes against several Iranian facilities. The tension immediately hit global trading desks, causing buyers to scramble for oil contracts as they worried about real-world supply shortages.
By early Monday morning, the international benchmark, Brent crude, rose by $2.75—or over 3 per cent—to hit $90.85 per barrel. At the same time, the US benchmark oil, West Texas Intermediate (WTI), went up by $2.56 to trade at $85.50 per barrel.
The main reason for this sudden price jump is the growing danger around the Strait of Hormuz. This narrow body of water is a critical shipping lane responsible for moving a fifth of the world’s total oil supply and huge amounts of liquefied natural gas (LNG).
Recent ship-tracking data reveals that traffic through the area has slowed down dramatically. Only four large ships sailed through the strait on Sunday, down from eight the day before. Shipping had already started slowing down after a commercial vessel was attacked near the strait on 7 July, forcing global transport companies to double-check the safety of the route.
Energy market experts warn that if these military actions continue and ship movements stay low, oil prices could stay high for quite a while. Stephen Innes, a leading analyst at SPI Asset Management, pointed out that the market is currently caught between two tough realities: the hope that worldwide inflation will slow down and the sudden risk of a long-term oil price shock.
If oil prices stay at this high level, the rising cost of transport and manufacturing could slow down global economic growth. For countries that rely heavily on buying foreign energy, a long period of oil above $90 a barrel will make daily life pricier, drive up the cost of generating electricity, and put a heavy financial strain on national budgets.
