TOKYO, March 9 - U.S. crude futures climbed sharply in early trade on Monday, reaching their highest levels since July 2022 as the widening conflict involving the United States, Israel and Iran heightened worries about tighter global oil supply and possible extended interruptions to shipments through the Strait of Hormuz.
U.S. West Texas Intermediate (WTI) crude futures rose as much as $20.34 a barrel during the session and were trading up $14.83, or 16.31%, at $105.73 as of 2220 GMT. Earlier in the day the contract briefly touched $111.24, an intraday gain of 22.4% from recent levels. The benchmark had already climbed 12% on Friday and has surged 36% over the past week.
Geopolitical developments reinforced the market rally. Iran named Mojtaba Khamenei to succeed his father, Ali Khamenei, as Supreme Leader, a move cited as signaling that hardliners remain firmly in control in Tehran a week into the conflict with the United States and Israel. Separately, Israel's military reported it struck Iranian commanders in the Lebanese capital early on Sunday, expanding its campaign into central Beirut after days of strikes that have resulted in nearly 400 deaths.
Traders and market participants assessed that the fighting could translate into weeks or months of elevated fuel costs for consumers and businesses worldwide, even if the conflict were to end quickly. The rationale given is that suppliers would likely face damaged facilities, disrupted logistics and higher risks to shipping operations, all of which can impair immediate restoration of supply and raise the risk premium on oil prices.
The size of the daily moves in WTI underscores the market's sensitivity to disruption risks in critical shipping corridors and to shifts in political leadership and military actions across the region. With inventories, tanker movements and refinery operations potentially affected, price volatility may persist while the conflict evolves.
Summary
U.S. crude futures jumped to the highest levels since July 2022 on March 9 amid an expanding U.S.-Israeli conflict involving Iran. WTI rose as much as $20.34 intraday, trading at $105.73 as of 2220 GMT after earlier hitting $111.24. The contract has gained 36% over the past week following a 12% rise on the prior Friday. Regional developments - including Iran naming Mojtaba Khamenei as Supreme Leader and Israeli strikes in Beirut that killed nearly 400 people - amplified concerns over disrupted shipments through the Strait of Hormuz and damage to facilities and logistics, which could keep fuel prices elevated for weeks or months.
Key points
- WTI crude futures surged, at one point rising 22.4% to $111.24 and trading at $105.73 as of 2220 GMT after a $14.83, or 16.31%, gain.
- The benchmark had climbed 12% on the prior Friday and was up 36% over the past week, reflecting rapid market repricing amid geopolitical tensions.
- Developments in Tehran and Beirut - including a succession announcement in Iran and Israeli strikes in Lebanon - intensified concerns about supply disruptions and shipping risks, with potential impacts on consumers and businesses globally.
Risks and uncertainties
- Disruption to shipments through the Strait of Hormuz could tighten global supply and sustain higher fuel prices - this affects energy, transportation and logistics sectors.
- Damaged facilities and disrupted logistics may slow supply restoration, prolonging elevated prices for consumers and businesses - this impacts retail, manufacturing and shipping-dependent industries.
- Escalation of military actions in the region, including strikes in Beirut and broader operations, adds uncertainty over near-term shipping safety and infrastructure integrity, increasing market volatility for energy markets.