Energy prices rose sharply yesterday as disruptions to tanker traffic through the Strait of Hormuz and damage to production facilities raised uncertainty about how US and Israeli attacks on Iran would affect supply to the world economy.
The biggest shock was to natural gas prices, which rose more than 40 per cent in Europe when QatarEnergy, a major supplier, halted production of liquefied natural gas after its facilities were attacked.
“Infrastructure is at risk throughout the region, and it’s not just at risk because of deliberate attacks, but also inadvertent attacks,” said Kevin Book, managing director at Clearview Energy Partners.
US oil rose 6.3 per cent to US$71.23 per barrel, while international standard Brent was up 6.7 per cent to settle at US$77.74 per barrel.
Higher oil prices raise the prospect of costlier gasoline for US drivers as well as increased prices for other goods at a time when people in many countries have been stung by inflation.
A key focus was the Strait of Hormuz at the southern end of the Persian Gulf, through which 20 per cent of the world’s oil supply passes. Tanker traffic dropped sharply as satellite navigation systems were disrupted, data and analytics firm Kpler said on X. The UK Maritime Trade Operations Center reported attacks on several vessels in the area on either side of the strait and warned of elevated electronic interference to systems that show where ships are.
The price of crude is the single largest factor in how much US drivers pay for fuel—a highly political issue ahead of midterm Congressional elections. And higher oil prices are usually felt at the pump within a couple of weeks at most.
Gasoline prices are already rising ahead of the summer driving season as people travel more. The national average for a gallon (3.7 litres) of regular went up by US$0.06 yesterday. Crude price increases are substantially reflected in pump prices in 20 days and a US$10 per barrel increase typically results in around a US$0.25 rise per gallon, according to 2019 research by the Federal Reserve Bank of Dallas. (AP)
