Oil prices eclipsed $100 per barrel for the first time in more than three-and-a-half years on Sunday as the Iran war hinders production and shipping in the West Asia.
The price for a barrel of Brent crude, the international standard, was at $107.97 after trading resumed on the Chicago Mercantile Exchange, up 16.5 per cent from its Friday closing price of $92.69.
West Texas Intermediate, the light, sweet crude oil produced in the United States, was selling for about USD 106.22 a barrel. That is 16.9 per cent higher than it closed Friday at $90.90.
Both could rise or fall as market trading continued.
The increases followed the US crude price jumping by 36 per cent and Brent crude rising by 28 per cent last week. Oil prices have surged as the war, now in its second week, ensnared countries and places that are critical to the production and movement of oil and gas from the Persian Gulf.
Roughly 15 million barrels of crude oil -- about 20 per cent of the world's oil -- typically are shipped every day through the Strait of Hormuz, according to independent research firm Rystad Energy. The threat of Iranian missile and drone attacks has all but stopped tankers from travelling through the strait, which is bordered in the north by Iran, carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran.
Iraq, Kuwait and the UAE have cut their oil production as storage tanks fill due to the reduced ability to export crude. Iran, Israel and the United States also have attacked oil and gas facilities since the war started, exacerbating supply concerns.
The last time US crude futures traded above USD 100 per barrel was June 30, 2022, when the price reached USD 105.76. For Brent, it was July 29, 2022, when the price hit USD 104 per barrel.
The global surge in oil prices since Israel and the US attacked Iran on March 1 has rattled financial markets, sparking worries that higher energy costs will fuel inflation and lead to less spending by US consumers, the main engine of the economy.In the US, a gallon of regular gasoline rose to USD 3.45 on Sunday, about 47 cents more than a week earlier, according to AAA motor club. Diesel was selling for about USD 4.6 a gallon, a weekly increase of about 83 cents.
Energy Secretary Chris Wright, speaking on CNN's "State of the Union", said US gas prices would be back under USD 3 a gallon "before too long".
"Look, you never know exactly the time frame of this, but, in the worst case, this is a weeks, this is not a months thing," Wright added.
If oil prices stay above USD 100 per barrel, some analysts and investors say it could be too much for the global economy to withstand.
Iranian authorities said strikes by Israel on oil depots in Tehran and a petroleum-transfer terminal early on Sunday killed four people. Israel's military said the depots were being used by Iran's military for fuel to launch missiles. Mohammad Bagher Qalibaf, the speaker of Iran's parliament, warned that the war's impact on the oil industry would spiral.
Iran exports roughly 1.6 million (16 lakh) barrels of oil a day, mostly to China, which may need to look elsewhere for supply if Iran's exports are disrupted, another factor that could increase energy prices.
The price of natural gas also has climbed during the war, though not by as much as oil. It was selling for about USD 3.33 per 1,000 cubic feet late on Sunday. That is 4.6 per cent higher than its Friday closing price of USD 3.19, after rising about 11 per cent last week.
US stock index futures, a bellwether for the market, fell late on Sunday, pointing to Wall Street's main indexes opening down on Monday. The future for the S&P 500 was down 1.6 per cent, while the Dow's fell 1.8 per cent. The future for the Nasdaq composite was down 1.5 per cent. On Friday, the S&P 500 dropped 1.3 per cent and the Dow plunged as many as 945 points before finishing with a loss of roughly 450, and the Nasdaq sank 1.6 per cent.