Iran war sends US crude up US$10 a barrel

CRUDE OVER US$100 A BARREL?

Qatar’s energy minister told the Financial Times he expects all Gulf energy producers to shut down exports within weeks, a move he said could drive oil to US$150 a barrel, according to an interview published on Friday.

“The worst case scenario is developing before our eyes,” John Kilduff, a partner at Again Capital said. “I think the forecasts of US$100 a barrel all are to come to true.”

Oil started its steep rally after the US and Israel launched strikes on Iran last Saturday, prompting Tehran to stop tankers moving through the Strait of Hormuz.

Oil supply equal to about 20 per cent of world demand usually passes through this waterway each day. With the Strait now effectively closed for seven days, that means about 140 million barrels of oil – equal to about 1.4 days of global demand – have been unable to reach the market.

The conflict has spread across the Middle East’s key energy-producing areas, disrupting output and forcing shutdowns of refineries and liquefied natural gas plants.

“Every day the Strait stays closed, prices will go higher,” said Staunovo. “The belief in the market was that Trump might pull back at some point because he doesn’t want to have high oil prices, but the longer that takes, the clearer it is how much is at risk.”

US President Donald Trump told Reuters in an exclusive interview on Thursday that he was not concerned about rising US gasoline prices linked to the conflict, saying, “if they rise, they rise.”

The possibility that the US Treasury Department might take action to combat rising energy costs briefly pushed prices down by more than 1 per cent early on Friday.

Losses narrowed after Bloomberg News reported that the Trump administration had ruled out using the Treasury Department to trade oil futures.

The Treasury on Thursday granted waivers for companies to buy sanctioned Russian oil. The first waivers went to Indian refiners, who have since bought millions of barrels of Russian crude.