The increase in international oil markets seemed to be more of an unlucky hiccup than an impending oil shock until late on Thursday. For what was long thought to be the oil market’s worst-case scenario, the 10% price spike that followed the Strait of Hormuz shutdown seemed fairly innocuous.
The scenario altered on Friday, and the penny dropped. Oil markets came alive when Qatari Energy Minister Saad al-Kaabi intervened, warning that all Gulf energy providers would probably stop exporting in a few days and that oil prices would soon reach $150 per barrel. Since the start of the battle, crude oil has increased by 27%.
The price of derivative petrochemical products, such as jet fuel and urea, which are essential for livelihoods and industrial supply chains that also depend on unrestricted transit in the Gulf, is also rising. The markets are beginning to anticipate worse situations, if not the worst case scenario, even though this is not yet an energy shock. Next week, it won’t take much for oil to go beyond the $100 mark.
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