World oil prices surged nearly 20%, reaching their highest level since July 2022.
Brent and WTI crude oil prices surged on March 9th due to concerns about supply disruptions in the Middle East. Iraq and Kuwait began cutting production as storage facilities reached maximum capacity.
World oil prices recorded record gains in Monday's trading session (March 9), reaching their highest level since July 2022. The escalating conflict in the Middle East has put direct pressure on energy markets, raising concerns about prolonged disruptions to shipping through the Strait of Hormuz.
High volatility on international exchanges.
During the trading session, Brent crude oil prices rose by as much as $18.35 (equivalent to 19.8%), reaching a high of...$111.04 per barrelIn other news, the price of this type of oil also recorded an increase of $15.24 (equivalent to 16.4%), reaching $107.93 per barrel.
In the US market, WTI crude oil prices rose $16.50 (equivalent to 18.2%), closing at $107.40 per barrel. Notably, at the beginning of the trading session, WTI prices briefly surged by 22.4% (equivalent to $20.34), reaching $111.24 per barrel. Prior to that, in the previous trading week, Brent and WTI oil prices increased by 27% and 35.6%, respectively.
Supply from the Middle East is being tightened due to conflict.
Production at major oil fields is facing serious challenges. Specifically, Iraq's oil output from southern fields has plummeted by 70%, now only maintaining at a minimal level.1.3 million barrels/dayThe main reason identified is that the country is unable to export oil through the Strait of Hormuz amid escalating conflict with Iran.
In addition, Kuwait Petroleum Corporation (KPC) began cutting production on Saturday and declared force majeure on shipments. Prior to this, Qatar had also proactively reduced its liquefied natural gas (LNG) production to adapt to the new situation.
The pressure from storage capacity has reached its limit.
According to Daniel Hynes, senior commodities strategist at ANZ, this strong price surge stems from reports indicating that Middle Eastern producers are being forced to cut output due to rapidly filling storage facilities. An official from Basra Oil Company (Iraq) confirmed that crude oil storage facilities there have reached maximum capacity.
Mr. Hynes further noted that the next sign to watch is whether these countries will have to shut down their oil wells. Closing oil wells would not only cause an immediate drop in production but also delay the recovery of supply after the conflict subsides, potentially maintaining high prices for a longer period. Experts predict that the UAE and Saudi Arabia may also soon have to implement similar production cuts.
