Crude Oil Gives Back Ground After Skyrocketing Above $100 A Barrel But Remains Sharply Higher

(RTTNews) - After skyrocketing early in the session, the price of crude oil has given back ground over the course of the trading day on Monday but remained sharply higher.

WTI Crude Oil for April delivery was last seen trading up by $3.11 (or 3.42%) at $94.01 per barrel after soaring above $100 a barrel for the first time since 2022 earlier in the day.

Crude oil has extended its recent surge as the ongoing U.S.-Israeli war with Iran has brought global energy supply to a grinding halt.

The combined attack initiated after U.S. President Donald Trump accused Iran of developing dangerous nuclear weapons entered day number 10 today. The strikes previously led to the death of Iran's Supreme Leader Ayatollah Ali Khamenei.

Today, Iran announced Mojtaba Khamenei as its new leader, with the Iranian political and military authorities (including President Masoud Pezeshkian) pledging full support to him.

Stating that he is not happy with the choice, Trump has stated that the U.S. would select a new leader for Iran and install a new regime but categorically asserted that the attacks on Iran would continue until Iranian forces surrender unconditionally. Of note, while Russia supported Iran's new leadership, China called the appointment an internal matter.

Yesterday, in a post on Truth Social, Trump brushed aside concerns of rising oil prices due to the war and added that it is a "very small price to pay" for the world's safety and peace.

With the Strait of Hormuz (considered as a critical chokepoint for oil and energy transit) blocked due to threats of Iranian attacks, oil prices have been moving up north for the past few days.

Reportedly in Saudi Arabia, the largest oil producer Aramco has reduced output in two of its fields as exports across the gulf have been choked.

Many other gulf producers are facing the same constraints as transit challenges have spread throughout the region.

Crude output from Iraq plunged by around 70%. Kuwait has started to shut down production as the entire gulf oil producers are battling storage difficulties. Bahrain's state-owned Bapco energy declared force majeure.

Since Iran is also targeting its Arab neighbors that provide military bases for the U.S. forces, the conflict appears likely to drag on indefinitely with no indication of a ceasefire or truce.

With energy infrastructure in Iran and in the neighboring Arab nations undergoing severe damages due to aerial attacks, the jump in oil price has reinforced inflationary concerns.

Economists are of the view that global central banks would likely adopt a hawkish stance until the Middle East conflict eases, prompting investors to shift focus from risky assets towards the U.S. Dollar.

The U.S. dollar index was last seen trading at 99.13, up by 0.15 points (or 0.15%) today.

The Financial Times reported that the G7 nations are considering a joint release of petroleum from their reserves in coordination with the International Energy Agency to combat the price surge. This news capped the price surge to a moderate degree.

However, a meeting of G7 finance minsters with the IEA concluded with no concrete agreement on releasing the oil reserves. As of now, the G7 countries have committed to closely monitor the situation and intervene if necessary.