SINGAPORE, March 9 - Oil prices jumped about 20% in early trading on Monday, hitting their highest since July 2022, as the expanding U.S.-Israeli war with Iran fuelled fears of tighter supply and prolonged disruptions to shipments through the Strait of Hormuz.
Market participants pointed to reports that producers across the Middle East are trimming output amid rapidly filling storage facilities. Those reports contributed to a sharp rally in crude prices as traders priced in the risk that regional supply could be constrained for an extended period.
Commentary from Daniel Hynes, senior commodity strategist at ANZ in Sydney, underscored those concerns. He said: "I think prices have rallied this morning on the reports that Middle East producers are now reducing output due to storage facilities filling up fast.
"I certainly think the spectre now of Middle Eastern producers curtailing output is going to keep those prices elevated. The next flag will be whether it eventually reaches a point where they have to start shutting in oil wells, which not only further impacts output but also delays a response once the conflict eases. That would potentially sustain those prices for much longer."
Hynes' remarks framed the key market questions going forward: whether production cuts tied to limited storage become more widespread, and whether production could be physically curtailed through well shut-ins if storage constraints persist. Both scenarios were cited as potential drivers of sustained higher prices if the security situation in the region does not improve.
The immediate market reaction reflected an acute sensitivity to disruptions in the main shipping lane for Middle Eastern crude, with the Strait of Hormuz singled out as a focal point for potential extended interruptions. Traders and analysts noted that sustained logistical or physical disruptions in that corridor could feed through to global supply balances, helping to explain the rapid rise in prices observed during early trading on Monday.
The situation remains fluid. Market commentators emphasized that the degree and duration of any production curtailments - and whether wells are eventually shut in - will be critical in determining how long prices remain at these elevated levels.