Global oil prices surged sharply, with Brent Crude for May delivery breaching USD100 per barrel for the first time in nearly four years as Iran threatened to keep the Strait of Hormuz closed amid escalating tensions with the US and Israel.
Dubai crude, the benchmark used by the Philippines and much of Asia, climbed to USD137.35 per barrel for May delivery, the highest level in about 18 years and a stark reminder of how geopolitical flashpoints can rapidly disrupt energy markets.
Prices continued to rise despite emergency action from the International Energy Agency, which announced the biggest release of strategic oil reserves to calm markets. The Paris-based agency said its members approved the release of 400 million barrels of oil, about a third of more than 1.2 billion barrels of oil in emergency stockpiles maintained by its 32 member countries.
The IEA was established in 1974 following the first global oil shock and has coordinated similar reserve releases during major supply disruptions, including the Gulf War in 1991, Hurricane Katrina in 2005, the Libyan Civil War in 2011 and twice in 2022 after Russia invaded Ukraine.
IEA Executive Director Fatih Birol said the quickest way to ease the supply squeeze would be restoring shipping traffic through the Strait of Hormuz, one of the world’s most critical energy corridors.
About 15 million barrels of crude oil and another 5 million barrels of petroleum products pass through the narrow waterway each day, representing roughly a quarter of global seaborne oil trade.
Iran’s new supreme leader has vowed to keep the strait closed to “pressure the enemy,” raising fears of a prolonged supply disruption.
Birol noted that with limited export routes and storage capacity, Middle East oil and gas producers have already started to cut production, further straining supply. Refinery disruptions could also tighten supplies of jet fuel and diesel, petroleum products that underpin global trade and travel.
Liquefied natural gas markets are also under strain as shipments from Qatar and the United Arab Emirates slow, with Asian economies expected to bear the brunt of the supply squeeze.
“To be clear, the most important thing for a return to stable flow of oil and gas is the resumption of transit through the Straits of Hormuz,” said Birol.
