The West Texas Intermediate gained over 2% to cross $100 per barrel, while Brent gained a similar quantum to cross $105 per barrel in early trading.
Oil prices are holding on to gains made over the last two weeks as US President Donald Trump weighs a military strike on Iran’s key oil export facilities on Iran’s Kharg island.
In a Truth Social post, Trump said he ordered strikes on Friday on Iranian military assets in Kharg island but left oil infrastructure safe. However, he warned that if Iran continues to attack tankers in the Strait of Hormuz, he will be forced to reconsider his decision.
Trump’s warning was reiterated by US ambassador to the United Nations, Mike Waltz, who said in an interview to CNN, that Trump deliberately hit the military infrastructure for now, but will certainly have that option open if he wants to take their energy infrastructure down.
Why Is Kharg Significant?
Kharg Island is a major oil export hub for Iran as about 90% of the country’s exports are shipped from there, according to JPMorgan. Iran, as per OPEC+, produced 3.2 million barrels of oil per day in February.
Most of that export from Kharg island goes to Japan.
JPMorgan’s Warning
Trump’s threat to hit oil infrastructure marks a major escalation in the war, according to Natasha Kaneva, the head of commodity strategy at JPMorgan.
A direct strike on Iran’s export terminal on the island would immediately halt the bulk of its crude exports of 1.5 million bpd, Kaneva said. This would likely trigger “severe retaliation” by Iran “in the Strait of Hormuz or against regional energy infrastructure,” she said.
The International Energy Agency also said that the supply of emergency barrels from reserves of Asian member countries will begin immediately, while those from the Europe and Americas will begin by the end of March.
(With Inputs From Agencies)
