The rise in crude oil prices can be attributed to the rising tensions that are currently being witnessed within the Middle East where Israel and Hezbollah are engaged in a very intense war. This has raised worries over energy security and disruption in oil supply.
West Texas Intermediate (WTI) crude jumped by 1.26% to $68.52 cents per barrel whereas Brent Crude increased by 0.94 to $72.27 per barrel in. This is the highest single-day turn up in weeks.
The price rise, in this case, comes after Israel conducted airstrikes on the Lebanese capital of Beirut targeting the central headquarters of Hezbollah, the fiercest such assaults in almost a year of conflict. It is however unclear what is the status of Hassan Nasrallah, the leader of Hezbollah. In response to this, threats have surfaced from Hezbollah including but not limited to rocket attacks and ship security alerts for any ships heading to Israeli ports creating worrying trends over the shipping services within the region.
In Yemen, the Houthis have also stepped up assaults on American and Israeli interests. This has only brought more chaos to the already volatile region. With the increasing tensions, there will likely be an increase in insurance costs as a result of risk exposure to damages on the Israeli jurisdiction and other countries’ sea ports.
“Oil prices are escalating because of geopolitical activities,” stated John Smith, energy analyst at XYZ Research.
“The area’s closeness to key oil transport routes heightens the risk of supply interruptions.”
As the situation worsens, world leaders are encouraging cool heads on all sides.
The United Nations has called for an emergency meeting. “There is no other way except for the members of the international community coming together to stop the situation from getting worse,” said the UN Secretary General Antonio Guterres.
The sharp increase in oil prices will have major consequences, especially on the global energy market, cost increase to consumers, threat of supply chain disruptions and increased instability in the energy market.
