Crude oil prices rose above $100 a barrel on Sunday after major producers in the Middle East cut production because the critical Strait of Hormuz remains closed due to the Iran war.
West Texas Intermediate jumped 18.3%, or $16.60, to $107.50 a barrel. World landmark Brent rose 16.5%, or $15.32, to $108.01. U.S. crude oil rose about 35% last week in its biggest gain in the history of futures trading dating back to 1983. The last time oil prices topped $100 a barrel was after Russia invaded Ukraine in 2022.
Shortly after oil surpassed $100 in opening Sunday afternoon trading, President Donald Trump aware in Truth Social that an increase in “near-term oil prices” was a “very small price to pay” for destroying Iran’s nuclear threat.
“Only fools would think differently!” Trump added.
Kuwait, OPEC’s fifth-largest producer, announced on Saturday pre-emptive cuts to its oil production and refineries due to “Iranian threats against the safe passage of ships through the Strait of Hormuz.” The state-owned Kuwait Petroleum Corporation did not detail the extent of the cuts.
Production in Iraq, OPEC’s second-largest producer, has effectively plummeted. Production from its three main southern oil fields has fallen 70% to 1.3 million barrels a day, three industry officials said. Reuters Sunday. Those fields produced 4.3 million bpd before the war with Iran.
And the United Arab Emirates, OPEC’s third-largest producer, said Saturday it is “carefully managing offshore production levels to address storage requirements.” The Abu Dhabi National Oil Company (ADNOC) said its onshore operations continue as normal.
Arab Gulf states are cutting production because they are running out of storage space, as barrels of oil pile up with nowhere to go due to the closure of the Strait. Oil tankers are unwilling to transit the narrow waterway because they fear Iran will attack them. About 20% of global oil consumption is exported through the Strait.
WTI crude oil, 5 years
The war showed few signs of easing despite President Donald Trump’s actions. say “it was already won.” Iran has reportedly named Ayatollah Ali Khamenei’s son Mojtaba as its new supreme leader. The United States and Israel killed Khamenei in the early days of the war.
Energy Secretary Chris Wright said Sunday that cross-strait traffic will resume after the United States destroyed Iran’s ability to threaten oil tankers.
“It won’t be long before we see a more regular resumption of ship traffic through the Strait of Hormuz,” Wright told CNN in an interview. “We’re nowhere near normal traffic right now. That’s going to take some time. But again, worst case scenario, it’s going to be a few weeks, not months.”