Oil surges to multi-year highs as U.S.-Israel war with Iran disrupts Middle East supplies
Tokyo, March 9 – Oil prices surged about 20% on Monday to their highest levels since July 2022 as the expanding conflict involving the United States, Israel and Iran disrupted supplies from major Middle Eastern producers and raised fears of prolonged shipping disruptions through the Strait of Hormuz.
Brent crude futures rose as much as $18.35, or 19.8%, to $111.04 a barrel and were up $15.24, or 16.4%, at $107.93 by 0014 GMT. U.S. West Texas Intermediate crude climbed $16.50, or 18.2%, to $107.40 a barrel after earlier jumping as much as $20.34, or 22.4%, to $111.24.
The sharp gains followed steep rises last week, when Brent advanced 27% and WTI climbed 35.6%, as escalating hostilities in the Middle East disrupted production and heightened concerns over global energy supplies.
Several major producers in the region have begun reducing output as the war affects export routes and storage capacity.
Oil production in Iraq from its main southern fields has dropped by about 70% to roughly 1.3 million barrels per day because exports through the Strait of Hormuz have been blocked by the conflict, according to three industry sources.An official with the state-run Basra Oil Company said crude storage facilities had reached maximum capacity.
Meanwhile, Kuwait Petroleum Corporation began cutting oil production on Saturday and declared force majeure on shipments, although it did not disclose the scale of the reductions.Earlier supply disruptions also included reductions in liquefied natural gas shipments from Qatar as the regional conflict affected export logistics.
Market participants have focused on the security of shipping routes through the Strait of Hormuz, one of the world’s most important oil transit chokepoints.
Analysts say prolonged disruptions could leave global consumers and businesses facing elevated fuel prices for weeks or months even if the conflict ends quickly, as producers cope with damaged facilities, logistical disruptions and increased risks to tanker traffic.
“I think prices have rallied this morning on the reports that Middle East producers are now reducing output due to storage facilities filling up fast,” said Daniel Hynes, senior commodity strategist at ANZ.
Hynes added that producers could soon be forced to shut down wells if storage limits are reached, which would further tighten supply and delay any recovery in output once the conflict eases.
Energy infrastructure across the region has also faced security threats.The Fujairah Media Office said a fire broke out in the UAE’s Fujairah oil industry zone after debris fell in the area, though no injuries were reported. Separately, Saudi Arabia said its defence ministry intercepted a drone heading toward the Shaybah oilfield.
The market reaction has also been influenced by political developments in Iran. Tehran on Monday named Mojtaba Khamenei as the new supreme leader following the death of his father, Ali Khamenei, signalling continued hardline leadership amid the conflict.
“With the appointment of the late leader’s son as Iran’s new leader, U.S. President Donald Trump’s goal of regime change in Iran has become more difficult,” said Satoru Yoshida, a commodity analyst at Rakuten Securities.
Yoshida said the development could intensify concerns that Iran will continue actions affecting shipping routes and energy infrastructure, a scenario that could push oil prices higher.
As prices climbed, U.S. Senate Democratic leader Chuck Schumer called on the administration to release crude from the Strategic Petroleum Reserve to stabilise markets and reduce price pressures on consumers.
