Washington, United States. Oil prices surged on Monday, with Brent and WTI rising about 14% and both benchmarks hitting above $119 a barrel amid supply cuts and fears of prolonged shipping disruptions linked to an expanding U.S.-Israeli war with Iran.
Benchmark prices and intraday highs
Brent crude futures were up $12.77, or 14%, at $105.46 per barrel at 1126 GMT, while U.S. West Texas Intermediate crude futures were up $12.66, or 14%, at $103.56. In volatile trading, Brent earlier hit $119.50 a barrel and WTI reached $119.48 a barrel.
Gains since late February attacks
Brent has surged as much as 66% and WTI 77% since their last close before the United States and Israel started attacks on February 28.
Comparison with historical highs
Monday’s prices compared with all-time highs of around $147 a barrel for the contracts in 2008, according to LSEG data going back to the 1980s.
Market structure signals supply tightness
The premium of front-month loading Brent contracts over contracts for delivery in six months’ time surged to an all-time high on Monday of almost $36, according to LSEG data going back to 2004. That was above the previous peak of around $23 in March 2022 during the early weeks of the Russia-Ukraine war. This premium indicates backwardation, reflecting expectations of intense current supply shortages.
Strait of Hormuz disruption
The Strait of Hormuz, through which roughly one-fifth of the world’s oil and liquefied natural gas typically passes, was virtually shut.
How do you expect the disruption in the Strait of Hormuz to affect energy prices in the coming weeks?
