Global Oil Prices Surge Amidst Escalating Tensions in the Strait of Hormuz

KATHMANDU. Crude oil prices rose in international markets on Friday, driven by new attacks on Saudi Arabian energy infrastructure and the persistent risk of closure at the strategically vital Strait of Hormuz. Despite a two-week ceasefire agreement between the U.S. and Iran, market impact remains minimal as investors grow increasingly anxious over potential supply disruptions.

In Friday morning trading, Brent crude prices climbed 83 cents, or 0.87 percent, to $96.75 per barrel. Similarly, West Texas Intermediate (WTI) rose by $1.04, or 1.06 percent, reaching $98.91 per barrel. While the two-week ceasefire announced by U.S. President Trump initially provided some relief, analysts suggest that market uncertainty has since intensified.

The conflict, which began with U.S. and Israeli airstrikes on Iran on February 28, has pushed the global energy market into a severe crisis. Although a ceasefire was brokered by Pakistan on Tuesday, fighting on the ground has not ceased. Ahead of the proposed peace talks in Pakistan, global attention remains fixed on tanker traffic through the Strait of Hormuz.

Analysts warn that oil prices will remain difficult to control until the Strait of Hormuz is fully reopened. As a critical global oil supply route, the Strait is currently near a standstill due to the conflict. Iran has proposed charging fees for vessels passing through the Strait as a condition for peace, a move already rejected by Western nations and the UN shipping agency. Energy consultancy Stratas Advisors has warned that if the situation in the Strait of Hormuz persists, Brent crude prices could reach as high as $190 per barrel.

Attacks on Saudi Arabia's oil production capacity have reduced the kingdom's output by 600,000 barrels per day. Furthermore, the Saudi Press Agency confirmed a reduction of 700,000 barrels per day in the flow of the East-West pipeline. Analysts at J.P. Morgan have described these events not merely as a minor disruption, but as a 'measurable supply shock.'

In the six weeks since the conflict began, approximately 50 infrastructure sites in the Gulf region have been damaged by drone and missile attacks. This has resulted in the shutdown of roughly 2.4 million barrels of daily oil refining capacity.

While Pakistan continues to pursue sustainable peace through dialogue, doubts remain regarding its ability to exert sufficient pressure to reopen the Strait of Hormuz. Even if Iran permits an increase in oil flow, prices are expected to remain significantly higher than pre-war levels.