The International Energy Agency (IEA) has warned that escalating conflict in the Middle East is increasing risks to global energy security, with threats to the Strait of Hormuz and Bab el-Mandeb Strait fuelling uncertainty over global oil and natural gas supplies.
The risk of the US-Iran conflict escalating into a broader regional war intensified on Monday after the United States carried out a ninth consecutive night of strikes on Iranian targets, prompting fresh missile attacks by Tehran and raising fears that diplomacy may be losing ground to military confrontation.
The United States and Iran exchanged a fresh wave of military strikes for a sixth consecutive night, deepening fears of a wider regional conflict as Tehran prepared to expand its pressure on global energy supplies by threatening to shut another critical maritime chokepoint at the entrance to the Red Sea.
Oil prices surged on Tuesday, with Brent crude climbing above $85 a barrel for the first time in a month, as Iran's missile strike on two oil tankers and the United States' decision to reinstate a sweeping naval blockade of Iranian ports intensified a confrontation for control of the strategic Strait of Hormuz.
Tolls in the Strait of Hormuz now look almost impossible to avoid. Should they land, the world would be paying a new tax on energy itself, and everyone from investors to households would feel it.
The Gulf faced a fresh escalation on Monday as US President Donald Trump announced the immediate reinstatement of a blockade targeting Iranian shipping in the Strait of Hormuz and proposed a 20 per cent charge on all cargo transiting the strategic waterway, intensifying a growing war of nerves between Washington and Tehran over one of the world's most critical energy chokepoints.
A recovery in world oil demand is underway, with consumption set to rise from its May nadir on seasonal trends and as pent-up demand is released in line with a rebound in product supplies, says an International Energy Agency (IEA) report.
The United States launched a fresh wave of military strikes against Iran on Sunday after Tehran targeted a merchant vessel transiting the Strait of Hormuz, sharply escalating a conflict that has spread across the Gulf and further dimmed hopes for a return to diplomacy.
Oil tanker traffic through the Strait of Hormuz slowed to a near standstill on Thursday as renewed military exchanges between the United States and Iran shattered a three-week-old ceasefire, raising fresh concerns over energy supplies and regional security.
The disruption to shipping through Strait of Hormuz is not just energy shock, but a whole economy story; and while direct damage to energy infrastructure exceeds $60 billion, lost revenue and trade loss will be above $150 billion, Crescent Petroleum CEO has said.
