Due to Iran war, there has been a big jump in the prices of crude oil in the international market. On Wednesday, March 18, the price of Brent crude oil crossed $ 103.45 per barrel. Within just 17 days, an increase of 41.1 percent has been recorded in the prices of crude oil. Crude oil, which was at $73 on February 27, has now crossed the $100 mark. This is having a direct impact on energy costs and transportation around the world.
Why did the prices of crude oil suddenly rise so much?
The main reasons behind this huge surge are war and interruption in oil supply. The Strait of Hormuz, where an average of 138 ships used to pass daily, is now able to pass through less than 5 ships. Iran’s parliamentary speaker Mohammad Baqer Qalibaf has said that now the condition of this route will not be the same as before the war. Apart from this, some other big reasons have come to light:
Drone attack in UAE: A drone strike caused a fire at the Fujairah Oil Industry Zone, causing a partial halt to oil loading operations.
Reduction in global supply: According to IEA, worldwide oil supply is expected to decline by 8 million barrels per day this month.
Military Tension: Continuous heavy attacks between American, Israeli and Iranian forces have made the situation more critical.
What effect will this have on the market and the common man?
If the price of crude oil crosses 100 dollars, it means that inflation on everything from transportation to everyday items may increase. Diesel prices in America have crossed $ 5 per gallon, which is the highest since 2022. In Asian markets too, refineries are paying record premiums on Dubai and Oman crude, driving up energy costs in these regions too. Iranian Foreign Minister Abbas Aragchi has warned that all countries will have to suffer its bad consequences on the global economy.
To stabilize the market, IEA member countries have decided to release 400 million barrels of oil from their emergency reserve into the market. IEA Executive Director Fatih Birol has said he is prepared to release more oil from its strategic reserve of 1.4 billion barrels if prices remain above $100. On the other hand, US President Donald Trump has sought to form an international coalition to reopen the Strait of Hormuz.