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Global oil prices soared above $90 a barrel on Friday as Middle Eastern crude output moved closer to the shutdown and investors braced for a prolonged conflict in the Gulf.
US President Donald Trump warned that there would be no deal with Iran unless the country offered “unconditional surrender”, while Qatar’s energy minister predicted that oil would reach $150 a barrel without a quick end to the war.
A benchmark Middle Eastern oil has already climbed above $100 a barrel as refineries race to pick up cargo that doesn’t need to pass through the Strait of Hormuz, the narrow waterway that transports 20 percent of the world’s crude and remains effectively blocked because of the conflict.
Arne Rasmussen, chief analyst at Global Risk Management, said the market had underestimated the potential duration of the war, and said there was a “snowball effect” as traders woke up to the risks.
Iraq has already shut down most of its oil production, with Kuwait expected to do so in the coming days as the countries’ storage facilities reach capacity. Analysts have warned that Saudi Arabia, the Gulf’s top producer, may also be forced to reduce output in the coming weeks.
Brent crude was up 7 percent at $91.44 a barrel in London on Friday afternoon, its highest level since April 2024 and above $72 before the conflict.
Prices for oil cargoes for delivery in the next few months have surged higher than those for delivery later in the year, indicating traders are willing to pay to secure crude immediately in the face of a supply shock.
US benchmark WTI was up more than 10 percent at $89.30 a barrel.
The narrowing gap between WTI and Brent has pushed demand higher for US barrels, which are cheaper and safer to buy, despite a sharp surge in freight rates during the crisis, analysts said.
“If you take a tanker to the United States, you get some fairly cheap barrels there compared to international benchmarks,” said Robert Yoger, a commodities expert at Mizuho Securities. “You don’t have to worry about delivery, you don’t have to worry about your tanker getting attacked by a cruise missile.”
Murban, the oil benchmark based on cargo loaded at the UAE’s Fujairah port on the eastern side of the Strait of Hormuz, has hit a premium against other crudes this week. On Friday it increased to $ 100.25 per barrel.
Amrita Sen, founder of consultancy Energy Aspects, said traders were betting the conflict would end “immediately”, explaining why oil’s initial rise earlier this week was more modest than many had expected. Sen said traders were also “jittery” after Russia’s invasion of Ukraine led to only a short-term rise in oil prices to $128 a barrel.
“This time is different because at least 10 million barrels per day are affected,” he said.
Some market participants now expect oil prices to return to triple digits.
“I think the longer this goes on, the more likely it will happen,” said a senior executive at a large energy company. “I think it’s not only more likely, but inevitable.”
