Latest news with #crudeoil
Yahoo
2 hours ago
- Business
- Yahoo
Israel-Iran crisis: How vital is the Strait of Hormuz for oil market?
The flare-up of tensions between Israel and Iran has reignited concerns over the security of the Strait of Hormuz, a vital artery for the global energy market. This narrow stretch of water, just 29 nautical miles wide at its tightest point, funnels nearly a third of the world's seaborne oil and a fifth of global LNG. The U.S. Energy Information Administration (EIA) calls it the "world's most important oil chokepoint," underlining the strategic importance of the passage that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. Investors and analysts are weighing the implications of a potential disruption in this narrow but critical waterway. What happens if the Strait of Hormuz is suddenly sealed off? Following Israeli attacks on Iran, Iranian officials have raised the spectre of closing the Strait—triggering a sharp surge in crude prices. According to the International Energy Agency (IEA), around 20 million barrels per day (mb/d) of crude oil and refined products passed through the Strait of Hormuz in 2023, representing nearly 30% of total global oil trade. Most of this volume—around 70%—was bound for Asia, with China, India and Japan among the largest recipients. While alternative pipeline infrastructure exists, it is limited. The IEA estimates that only 4.2 mb/d of crude oil can be rerouted via overland routes, such as Saudi Arabia's East-West pipeline to the Red Sea and the UAE's Abu Dhabi Crude Oil Pipeline to Fujairah. This capacity represents barely one quarter of the typical daily volume transiting the Strait. 'Any prolonged crisis in the Strait of Hormuz would not only disrupt shipments from key Gulf producers—Saudi Arabia, the UAE, Kuwait, Iraq and Qatar—but also make inaccessible the majority of the world's spare production capacity, which is concentrated in the Persian Gulf,' the IEA warned in a report. Related Israel kills IRGC intelligence chief and deputy, Iranian state media says Netanyahu says Israel has not ruled out killing Iran's Ayatollah Ali Khamenei Iran seeks international mediation amid conflict with Israel, Trump promises peace Era of nuclear disarmament 'coming to an end', SIPRI warns LNG markets are even more exposed to potential disruptions. All LNG exports from Qatar—the world's second-largest LNG exporter—and the UAE must pass through the Strait. The IEA reports that 90 billion cubic metres (bcm) of LNG transited the Strait in the first ten months of 2023, equal to 20% of global LNG trade. With no viable alternative routes for LNG exports from Qatar or the UAE, any maritime closure would severely tighten global supply. Around 80% of these LNG volumes are destined for Asia, while Europe receives roughly 20%, meaning disruptions would exacerbate competition between regions, especially in a tight market. 'The sheer volume of oil passing through the Strait and the scarcity of alternative routes means even brief disruptions would have significant consequences for the global market,' the IEA stated. While a full closure remains a low-probability scenario, analysts agree that the threat alone is enough to inject volatility into energy markets. Crude oil prices surged by 13% last week amid escalating tensions between Israel and Iran. Although prices have since eased slightly after reports confirmed that Iranian energy infrastructure remained untouched by Israeli strikes, the risk of further escalation—and potential disruption to global energy flows—remains elevated. In response, Wall Street analysts have been quick to assess the possible fallout from any interruption of oil and gas shipments through the Persian Gulf, particularly the Strait of Hormuz. Goldman Sachs warned that an extreme risk scenario involving a prolonged closure of the Strait could push prices well above $100 per barrel. The investment bank estimates that Iran currently produces around 3.6 million barrels per day (mb/d) of crude oil and 0.8 mb/d of condensates, with total seaborne exports averaging 2.1 mb/d so far this year—most of it heading to China. T ING's head of commodities strategy, Warren Patterson, indicates that the market has begun pricing in a substantially higher geopolitical risk premium in light of recent developments. Patterson stated that any disruption to Iranian oil flows would be enough to eliminate the expected oil surplus for the fourth quarter of 2025, likely pushing Brent crude prices toward $80 per barrel. Yet, the analyst warns that a more severe scenario—such as a disruption of shipping through the Strait of Hormuz—could be far more consequential. 'Almost a third of global seaborne oil passes through this chokepoint,' he noted. 'A significant disruption to these flows could drive prices up to $120 per barrel, particularly because most of OPEC's spare capacity is located in the Persian Gulf and would be inaccessible under such conditions.' "This escalation also has ramifications for the European gas market," he added. The Strait of Hormuz is more than just a shipping lane—it's a lifeline for global energy. With no easy detours for oil or LNG flows, its vulnerability puts markets on edge every time tensions flare in this region. A full closure of the Strait may still seem a remote event, but the mere threat is enough to rattle markets and keep oil prices elevated. As Iranian and Israeli forces continue to exchange strikes, the risk of miscalculation looms large. In a region where diplomacy is fragile and stakes are high, one wrong move could turn a regional conflict into a global energy crisis. 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Zawya
4 hours ago
- Business
- Zawya
Kuwait crude oil up $1.29 to $77.46 pb
KUWAIT -- The Kuwaiti crude oil price rose by USD 1.29 during Thursday's trading to reach USD 77.46 per barrel (pb),compared with USD 76.17 pb the day before, Kuwait Petroleum Corporation (KPC) said Friday. Brent futures also rose by USD 2.15 to USD 78.85 pb and West Texas Intermediate went up by USD 2.06 to USD 77.20 pb. All KUNA right are reserved © 2022. Provided by SyndiGate Media Inc. (
Zawya
4 hours ago
- Business
- Zawya
Asian refiners seek more Mideast oil after spot premiums jump on Israel-Iran conflict
SINGAPORE/NEW DELHI - Asian refiners have requested more term crude oil supplies loading in August and September from producers in the Middle East after spot premiums jumped, six trade sources said on Friday. Spot premiums for Middle East benchmarks rose above $3 a barrel on Thursday, the highest levels in four months, on fears of supply disruption after fighting broke out between Israel and Iran last week. "We are receiving additional interest from our customers in Asia," a source at a Middle East crude supplier said, adding that the requests are for cargoes loading in August and September. A source at an Asian refiner said the official selling prices (OSPs) for Middle East crude are lower than spot levels, making it more economical to seek more term supplies. Two sources at Indian refineries said they will be receiving more July-loading term crude supply from Middle East suppliers as they anticipate lower supplies from Russia. The sources declined to be named as they are not authorised to speak to the media. Producers such as Saudi Aramco, Abu Dhabi National Oil Co (ADNOC) and Iraq's SOMO typically notify term customers on their allotted volumes a month before cargoes are due to load. It is not immediately clear if the producers will supply more oil, three sources said, although one of them pointed to rising output from the bloc. The Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, are unwinding supply cuts, planning to increase output by 1.37 million barrels per day between April and July.
CTV News
4 hours ago
- Business
- CTV News
Shares and oil prices gain as the world waits to see if U.S. will join Israel's war against Iran
People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Friday, June 20, 2025, in Tokyo. (AP Photo/Eugene Hoshiko) MANILA, Philippines — Crude oil prices edged lower and Asian shares were mixed Friday as investors awaited more clarity on whether or not the U.S. will join Israel's war against Iran. U.S. futures edged lower after Wall Street was closed on Thursday for the Juneteenth holiday. U.S. benchmark crude oil lost 24 cents to US$73.64 per barrel, while Brent crude, the international standard, was down 18 cents at $76.56 per barrel. Oil prices have been gyrating as fears rise and ebb that the conflict between Israel and Iran could disrupt the global flow of crude. Iran is a major producer of oil and also sits on the narrow Strait of Hormuz, through which much of the world's crude passes. Investors remained wary after the White House said President Donald Trump could decide on whether to launch an attack on Israel within the next two weeks, but that he 'still believes diplomacy is an option,' said Anderson Alves, a trader at ActivTrades. 'Risk sentiments were cautious as Iran-Israel tensions continued roiling,' Mizuho Bank Ltd. said in a commentary. Trump's tariffs agenda remains another major factor weighing on markets. Tokyo's Nikkei 225 index edged 0.2% lower to 38,403.23 after Japan reported that its core inflation rate, excluding volatile food prices, rose to 3.7% in May, adding to challenges for Prime Minister Shigeru Ishiba's government and the central bank. 'Core Japanese inflation rose more than expected in May. Even so, the Bank of Japan is likely to prioritize the negative impact of U.S. tariffs, Min Joo Kang of ING Economics said in a commentary. 'For now, it's more concerned about the risk that US trade policies could break the virtuous circle of wage growth and inflation." Hong Kong's Hang Seng index rose 0.8% to 23,428.13 , while the Shanghai Composite fell 0.1% to 3,357.88. China's central bank kept its key 1-year and 5-year loan prime rates unchanged, as expected. Australia's S&P/ASX 200 shed 0.2% at 8,505.50, while South Korea's Kospi gained 1.5% to 3,021.84. On Thursday, the Bank of England kept its main interest rate at a two-year low of 4.25%, citing risks that the conflict between Israel and Iran will escalate. The U.S. dollar slipped to 145.37 Japanese yen from 145.46 yen. The euro rose to $1.1521 from $1.1498. Teresa Cerojano, The Associated Press
Reuters
4 hours ago
- Business
- Reuters
Asian refiners seek more Mideast oil after spot premiums jump on Israel-Iran conflict
SINGAPORE/NEW DELHI, June 20 (Reuters) - Asian refiners have requested more term crude oil supplies loading in August and September from producers in the Middle East after spot premiums jumped, six trade sources said on Friday. Spot premiums for Middle East benchmarks rose above $3 a barrel on Thursday, the highest levels in four months, on fears of supply disruption after fighting broke out between Israel and Iranlast week. "We are receiving additional interest from our customers in Asia," a source at a Middle East crude supplier said, adding that the requests are for cargoes loading in August and September. A source at an Asian refiner said the official selling prices (OSPs) for Middle East crude are lower than spot levels, making it more economical to seek more term supplies. Two sources at Indian refineries said they will be receiving more July-loading term crude supply from Middle East suppliers as they anticipate lower supplies from Russia. The sources declined to be named as they are not authorised to speak to the media. Producers such as Saudi Aramco ( opens new tab, Abu Dhabi National Oil Co (ADNOC) and Iraq's SOMO typically notify term customers on their allotted volumes a month before cargoes are due to load. It is not immediately clear if the producers will supply more oil, three sources said, although one of them pointed to rising output from the bloc. The Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, are unwinding supply cuts, planning to increase output by 1.37 million barrels per day between April and July.
