Middle East Conflict Sends Global Oil Prices Soaring
Global crude oil prices surged on March 5 as markets reacted to escalating geopolitical tensions in the Middle East and concerns over potential disruptions to global oil supply.
U.S. crude futures posted their largest single-day gain in nearly six years. At the close of trading, light sweet crude oil futures for April delivery on the New York Mercantile Exchange rose by $6.35 to settle at $81.01 per barrel, an increase of 8.51%. The jump marked the strongest one-day rise since early May 2020.
Meanwhile, London Brent crude futures for May delivery increased by $4.01 to close at $85.41 per barrel, representing a gain of 4.93%.
The surge in oil prices comes as military strikes by the United States and Israel against Iran entered their sixth day on March 5. Iran's Islamic Revolutionary Guard Corps stated that during wartime Iran has the authority to control navigation through the Strait of Hormuz, warning that vessels from the United States, Israel, and European countries would be prohibited from passing through the strategic waterway.
The Guard also said that its naval combat units struck a U.S. oil tanker early that morning.
Market analysts believe the uncertainty surrounding the duration of the conflict could continue to drive oil prices higher. According to Ritterbusch and Associates, international crude prices may have further room to rise as the timeline for the conflict remains unclear. The firm noted that if tensions persist into next week, New York crude futures could potentially exceed $95 per barrel.
Frank Walbaum, market analyst at German fintech company NAGA Group, said uncertainty over how long the conflict will last is a key factor pushing prices upward. He added that any meaningful market correction would likely depend on clear signs of geopolitical de-escalation or the sustained resumption of commercial tanker shipments.
Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB, also emphasized that the impact on oil prices will largely depend on the duration of the conflict. If hostilities extend beyond seven to twelve days, the market could face what he described as a 'more critical moment' for oil prices.
Rising crude prices have also pushed up gasoline costs in the United States. The American Automobile Association reported on March 5 that the national average price for regular gasoline has increased by nearly 27 cents per gallon since last week.
Gasoline prices typically climb during the spring due to seasonal demand increases. The last comparable weekly surge occurred in March 2022, at the beginning of the Russia-Ukraine conflict.