Crude oil prices surged above $100 per barrel on Sunday, after major Middle East producers cut output because the critical Strait of Hormuz remains closed due to the Iran war.
West Texas Intermediate jumped 17%, or $15.32, to $106.22 per barrel. Global benchmark Brent advanced 15%, or $14.28, to $106.92. U.S. crude oil surged about 35% last week in its biggest gain in futures trading history dating back to 1983. The last time oil prices topped $100 per barrel was after Russia invaded Ukraine in 2022.
Shortly after oil blasted past $100 at the open of trading Sunday evening, President Donald Trump posted on Truth Social that a gain in “short term oil prices” was a “very small price to pay” for destroying Iran’s nuclear threat.
“Only fools would think differently!” Trump added.
Kuwait, the fifth-biggest producer in OPEC, announced precautionary cuts Saturday to its oil production and refinery output due to “Iranian threats against safe passage of ships through the Strait of Hormuz.” The state-owned Kuwait Petroleum Corporation did not detail the size of the cuts.
Output in Iraq, the second-biggest OPEC producer, has effectively collapsed. Production from its three main southern oilfields has fallen 70% to 1.3 million barrels per day, three industry officials told Reuters Sunday. Those fields produced 4.3 million bpd before Iran war.
And the United Arab Emirates, the third-biggest producer in OPEC, said Saturday that it is “carefully managing offshore production levels to address storage requirements.” The Abu Dhabi National Oil Company (ADNOC) said its onshore operations are continuing normally.
Gulf Arab states are cutting production because they are running out of storage space, as oil barrels pile up with nowhere to go due to the closure of the Strait. Tankers are unwilling transit the narrow waterway because they are worried Iran will attack them. About 20% of the world’s oil consumption is exported through the Strait.
WTI crude oil, 5 years
The war showed little signs of easing despite President Donald Trump’s claim it was “already won.” Iran named Ayatollah Ali Khamenei’s son, Mojtaba, as its new supreme leader, according to reports. The U.S. and Israel killed Khamenei in the opening days of the war.
Energy Secretary Chris Wright said Sunday traffic through the Strait will resume after the U.S. has destroyed Iran’s ability to threaten tankers.
“We’re not too long away before you’ll see more regular resumption of ship traffic through the Straits of Hormuz,” Wright told CNN in an interview. “We’re nowhere near normal traffic right now. That will take some time. But again, worst case that’s a few weeks, that’s not months.”
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