Oil tops $116 as Iran warns of US invasion
Oil prices surged to their highest level in nearly two weeks on Monday amid escalating tensions in the US-Israel war on Iran.
Brent crude, the global benchmark, jumped more than 3 percent to exceed $116 a barrel, reaching its highest level since March 19, when it briefly touched $119.
The rise followed Iran’s warning that it is prepared for a US ground invasion. The speaker of Iran’s parliament said Tehran was awaiting US troops to “set them on fire” and “punish” their regional allies.
The warning came as the conflict intensified over the weekend. Iranian-backed Houthi forces launched missiles at Israel for the first time in the war, while Israel expanded its invasion of southern Lebanon.
Asian stock markets fell sharply in morning trading, with Japan’s Nikkei 225 and South Korea’s KOSPI both down more than 4 percent as of 1:30 GMT.
Iran’s effective closure of the Strait of Hormuz in response to US-Israeli attacks has disrupted roughly one-fifth of global oil and liquified natural gas (LNG) supplies, sparking the world’s largest energy crisis in decades.
Since the war began, oil prices have climbed nearly 60 percent, pushing fuel costs higher worldwide and prompting many countries to adopt emergency measures to conserve energy. Analysts warn that oil prices are likely to keep rising unless maritime traffic in the strait returns to normal levels.
US President Donald Trump has threatened to “obliterate” Iran’s energy infrastructure if Tehran does not lift its blockade of the waterway by April 6. He extended his initial deadline by 10 days on Thursday and has proposed a 15-point plan to end the conflict, highlighting the possibility of progress in indirect talks mediated by Pakistan.
“I do see a deal in Iran, yeah,” Trump told reporters on Air Force One late Sunday. “Could be soon.”
Tehran, however, rejected Trump’s plan, proposing its own ceasefire terms, including war reparations and recognition of Iran’s control over the strait.
Greg Newman, CEO of Onyx Capital Group, an oil derivatives trading firm, said consumers were only beginning to feel the full impact of the turmoil.
“Physical oil moves around the world in loading cycles, and Europe has taken around three weeks to really start feeling the effects of the oil shortage,” Newman told Al Jazeera. “Brent is starting to reflect the reality, and we think it’s a steady rise from here towards $120 and beyond.”
He added that the scale of the disruption had yet to be fully understood. “No one in the market has ever seen the outages we are now suffering from – physical premiums are the highest ever. There is still a sense that the macro world is not taking this seriously enough, but it is worse than anything that has come before it. The reality will come out in the economic numbers over the coming months.”
While Iran has allowed a limited number of transits by vessels not aligned with the US or Israel, traffic remains far below pre-war levels.
On Saturday, Pakistani Foreign Minister Ishaq Dar said Tehran had permitted 20 Pakistani-flagged vessels to pass the strait, describing it as a “meaningful step toward peace.” Malaysian Prime Minister Anwar Ibrahim also said last week that Iran had allowed Malaysian ships to transit the strait.
According to maritime intelligence firm Windward, seven non-Iranian vessels passed the strait on Thursday, up from five on Wednesday and four on Tuesday. Before the war began on February 28, the strait averaged 120 daily transits.
#From Al Jazeera
