Global oil prices jumped sharply on Tuesday as escalating conflict in the Middle East disrupted key supply routes, fuelling concerns of a potential global energy shortage.
Brent crude rose by $2.26, or about 2 per cent, to $115.04 per barrel in early trading, after hitting its highest level since March 19 in the previous session. US West Texas Intermediate (WTI) crude climbed $3.10, or nearly 3 per cent, to $105.96 per barrel, marking its highest level since early March.
The rally caps a dramatic month for oil markets. Brent has surged nearly 59 per cent in March, while WTI has risen around 58 per cent—its steepest monthly gains since May 2020.
The spike has been largely driven by supply disruptions linked to Iran’s effective closure of the Strait of Hormuz, a critical chokepoint through which roughly one-fifth of the world’s oil supply and significant volumes of liquefied natural gas pass.
Concerns intensified after Kuwait Petroleum Corporation reported that its fully loaded tanker Al Salmi, capable of carrying up to 2 million barrels of crude, was struck in an Iranian attack near Dubai port. Authorities have also flagged the risk of a potential oil spill, adding to supply worries.
Tensions have further escalated with missile strikes by Yemen’s Iran-aligned Houthi forces targeting Israel over the weekend. The attacks have raised fears of renewed disruption at the Bab el-Mandeb Strait, another vital maritime route connecting the Red Sea and the Gulf of Aden, and a key artery for trade between Asia and Europe.
Analysts warn that simultaneous instability at both the Strait of Hormuz and the Bab el-Mandeb could severely disrupt global energy flows.
“If the Houthis resume a blockade of the Bab el-Mandeb Strait, both of the world’s most critical energy arteries would be under pressure. This ‘twin chokepoint’ scenario is a nightmare for global supply chains,” said Tim Waterer, chief market analyst at KCM Trade.
In response, Saudi Arabia has begun rerouting a significant share of its crude exports via the Red Sea. Data from Kpler shows shipments to the Red Sea port of Yanbu surged to 4.658 million barrels per day last week, up sharply from an average of 770,000 barrels per day in January and February.
Meanwhile, US President Donald Trump has warned that Washington could target Iran’s energy infrastructure if Tehran does not reopen the Strait of Hormuz. Iran has dismissed US peace proposals as “unrealistic,” even as the White House maintains that talks between the two sides are ongoing.
Market participants remain cautious, with little clarity on a diplomatic resolution.
“The market does not see any clear offramp for the conflict, as both sides remain far apart despite optimistic messaging from Washington,” said Edward Meir.
