Iran conflict raises concerns over prolonged energy market disruption and price increases

US-Israeli Conflict Affects Global Fuel Supplies

A conflict between the United States and Israel in Iran has resulted in the suspension of approximately 20% of global crude oil and natural gas supply. The disruption is attributed to damaged facilities, disrupted logistics, and elevated risks to shipping.

As a result, global oil prices have surged by over 25% since the start of the war, leading to increased fuel costs for consumers worldwide. According to data from the American Automobile Association (AAA), the national average petrol price reached $3.41 per gallon ($0.9 a liter) on Saturday, with a weekly increase of $0.43.

Analysts at Goldman Sachs predict that oil prices could rise above $100 per barrel if shipping disruptions continue. The US crude oil settled at just below $91 per barrel on Friday, marking its largest weekly gain in data dating back to 1983.

The conflict has already led to the suspension of shipments from major oil-producing countries, including Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait. These countries have had to suspend around 140 million barrels of oil, equivalent to about 1.4 days of global demand.

Disruptions in global trade due to shipping issues are expected to increase freight costs and delay deliveries of goods. As a result, oil storage facilities in the Gulf region are rapidly filling, forcing some oilfields to cut production. Analysts predict that it may take several weeks or months for these fields to return to normal production levels.

Iranian forces have targeted regional energy infrastructure, including refineries and terminals, leading to shutdowns and damage. Qatar has declared force majeure on its gas exports due to Iranian drone attacks, which may take at least a month to resolve. The situation is expected to pose a global economic threat and create a combination of higher prices and slower growth.

The conflict’s impact on the global economy and energy markets will continue to be monitored as the situation develops.

Source: Al Jazeera