Oil prices rose sharply to their highest level since January after the United States joined Israel in attacks on Iran's nuclear facilities over the weekend, raising concerns about oil supplies.
Ekonomichna Pravda reported this with reference to Reuters.
The report said that Brent crude futures rose by USD 1.52 (1.97%) to USD 78.53 a barrel.
US WTI rose by USD 1.51 (2.04%) to USD 75.35 a barrel.
Both contracts had earlier jumped more than 3% to USD 81.40 and USD 78.40, respectively, reaching a five-month high before falling slightly.
The price surge came after US President Donald Trump said he had “destroyed” Iran’s main nuclear facilities in strikes over the weekend, joining an Israeli attack amid escalating conflict in the Middle East.
Tehran has vowed to defend itself in response.
Iran is OPEC’s third-largest oil producer.
Market participants are expecting prices to rise further amid growing concerns that Iran could retaliate by closing the Strait of Hormuz, through which about a fifth of the world’s oil passes.
“The ongoing geopolitical escalation is a key factor that could push Brent prices even higher, to USD 100, and USD 120 a barrel looks increasingly realistic,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.
Iran’s state-run Press TV reported that Iran’s parliament had approved the decision to close the strait.
Iran has repeatedly threatened to do so before, but has never carried out the threat.
On Monday, Iran and Israel exchanged air and missile strikes, amid rising international tensions over an expected Iranian response to a US attack on its nuclear facilities.
“The risk of damage to oil infrastructure has increased significantly,” said Jun Goh, senior analyst at Sparta Commodities.
While there are alternative pipelines in the region, some oil will not be able to be exported if the Strait of Hormuz becomes inaccessible.
Shipping companies will also increasingly avoid the region, she added.
Goldman Sachs estimated in a report on Sunday that if oil flows through the strategic strait were to be halved for even a month, Brent could briefly jump to USD 110 a barrel, and supplies would remain 10% lower for the next 11 months.
As the Ukrainian News agency earlier reported, Brent crude oil prices slowed down the previous session's growth and fell by almost USD 2 on June 20 after the White House postponed a decision on US involvement in the Israeli-Iranian conflict, but they are still poised to remain in the black for a third consecutive week.
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