Oil price dips below $100 per barrel
The price of Brent crude oil, the international benchmark, fell back below $100 a barrel late yesterday after planned peace talks were delayed and President Donald Trump said the U.S.
The price of Brent crude oil, the international benchmark, fell back below $100 a barrel late yesterday after planned peace talks were delayed and President Donald Trump said the U.S. would extend the cease-fire with Iran.
Without giving a specific date for the extension, Trump said in a post on Truth Social that it will continue until Iran and Pakistan come up with “a unified proposal” and “discussions are concluded, one way or the other.”
Earlier in the day, most-active Brent crude futures settled up 3.1 per cent to $98.48 a barrel, while West Texas Intermediate futures settled up 2.6 per cent to $89.67. They briefly topped $100 before the President’s announcement about the extension.
Shipping traffic through the Strait of Hormuz, which normally handles about 20 per cent of global oil and liquefied natural gas (LNG) supplies, remained broadly halted yesterday with only three ships passing the waterway in the past 24 hours, shipping data showed.
Meanwhile, the Head of the International Energy Agency (IEA), Dr. Fatih Birol, assessing the situation yesterday, said the conflict between Iran and the United States and Israel is creating the worst energy crisis ever faced by the world
“This is indeed the biggest crisis in history. The crisis is already huge, if you combine the effects of the petrol crisis and the gas crisis with Russia,” Birol told France Inter radio in an interview broadcast.
The war in the Middle East has choked up maritime traffic in the Strait of Hormuz, which is a conduit for a fifth of global oil and liquefied natural gas flows. It has also come on top of the effects of Russia’s war with Ukraine, which had already severed Russian gas supplies toEurope.
Birol had said earlier this month that he viewed the current situation in global energy markets as worse than previous crises in 1973, 1979 and 2022 combined.
Besides, he opined that the situation at the Strait of Hormuz could redraw the global energy map as world’s most critical oil chokepoint is no longer seen as a reliable route for oil and gas supply.
“The Iran war and the de facto closure of the Strait of Hormuz have shown the world that the Strait has lost its status of a reliable energy export route. As a result, the crisis could lead to the global energy flows being redrawn.
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“Even if the Strait of Hormuz opens tomorrow, returning to the pre-war period will require significant time, a recovery process, and large volumes of capital,” Birol said. The IEA has estimated that the recovery of output to pre-war levels could take up to two years.
According to him, the timeline for the return of supply will vary from one country to another. For instance, he explained that a country like Iraq would need much more time to restore output to pre-war levels compared to Saudi Arabia.
“It will be a very difficult period for energy-importing countries. There is no magic wand that will immediately normalize the markets. The era when the global economy was critically dependent on a single strait is becoming history. Even if everything returns to normal tomorrow, high prices and volatility in the markets will persist for a long time,” Birol added.
The IEA estimated in its monthly report last week that global oil supply plunged by 10.1 million barrels per day (bpd) to 97 million bpd in March, due to attacks on energy infrastructure in the Middle East and ongoing restrictions to tanker movements through the Strait of Hormuz, leading to the largest disruption in history.
