Iran warned on Wednesday that oil prices could rise to USD 200 a barrel as its forces struck merchant shipping in Gulf waters, deepening what the International Energy Agency (IEA) described as one of the worst oil shocks since the 1970s and prompting calls for an unprecedented release of strategic reserves.
The warning came as fighting triggered by joint US and Israeli airstrikes nearly two weeks ago spread across the Middle East, killing about 2,000 people, mostly in Iran and Lebanon, and disrupting global energy markets and transport routes.
Iran’s Revolutionary Guards said their forces had fired on ships in the Gulf after they ignored orders, with three vessels reported hit on Wednesday. A Thai-flagged bulk carrier was set ablaze, forcing crew evacuations, while two other ships sustained damage, bringing the number of merchant vessels hit since the war began to 14.
Oil prices rose nearly 5 per cent on Wednesday amid renewed fears of supply disruptions, after earlier surging to almost USD 120 a barrel before retreating to around USD 90. Global stock markets fell.
US President Donald Trump said he was not ready to call an end to the conflict, telling supporters at a rally in Kentucky that the United States had to “finish the job”. He said US forces had destroyed 58 Iranian naval vessels and claimed Tehran was “pretty much at the end of the line”.
Despite those assertions, there was no sign that shipping could safely resume through the Strait of Hormuz, a narrow channel along Iran’s coast that carries about a fifth of the world’s oil. Iranian military officials said the strait was firmly under Tehran’s control, while sources said Iran had deployed about a dozen mines, complicating any reopening.
The G7 agreed on Wednesday to examine providing naval escorts to ensure freedom of navigation in the Gulf.
The IEA recommended releasing 400 million barrels from global strategic reserves to stabilise prices, the largest coordinated drawdown on record. Washington swiftly endorsed the move, with US Energy Secretary Chris Wright saying Trump had authorised the release of 172 million barrels from the Strategic Petroleum Reserve starting next week.
In a statement, government of India welcomed the move. “India, as an Associate Member of the International Energy Agency (IEA) and an active participant in international energy cooperation, welcomes the IEA’s decision to release emergency oil stocks amid the prevailing supply disruptions. The Government of India is closely monitoring the evolving situation in global energy markets, particularly in the Middle East,” the government said.
Iranian officials signalled they intended to impose a prolonged economic shock. “Get ready for oil to be USD 200 a barrel, because the oil price depends on regional security, which you have destabilised,” said Ebrahim Zolfaqari, a spokesperson for Iran’s military command, in comments addressed to Washington.
The United States warned that Iran and allied militias could target US-owned oil and energy infrastructure in Iraq, while Federal Bureau of Investigation warnings cited by ABC News raised concerns about potential Iranian drone threats. |
