Olawunmi Ajibike
Global oil prices rose again on Thursday after comments from Donald Trump, who said preventing Iran from obtaining nuclear weapons was more important than keeping oil prices under control.
Prices initially pulled back before climbing again following the remarks, reflecting growing concerns in energy markets over escalating tensions in the Middle East.
At around $100 per barrel, the benchmark Brent crude has increased by about 38 percent compared with its level before the conflict that began 13 days ago when the United States and Israel launched airstrikes against Iran.
Energy analysts say the market has been unsettled by developments in the region. According to David Morrison, an analyst at Trade Nation, energy markets have been shaken by reports of Iranian attacks on shipping in the Persian Gulf, as well as missile strikes aimed at several countries across the region.
He also pointed to the failure to reopen the critical Strait of Hormuz and ensure safe passage for ships, suggesting that the United States faces limitations in guaranteeing security in the area.
The release of strategic oil reserves by the International Energy Agency is estimated to be equivalent to about 20 days of oil supplies that typically pass through the Strait of Hormuz, which has been largely disrupted due to Iranian attacks on vessels.
Morrison noted that if the decision to release oil from strategic reserves was intended to cap rising prices, it has so far failed to achieve that goal.
The surge in oil prices is already affecting the aviation sector, forcing airlines to adjust their operations.
Air New Zealand announced it would cancel about 1,100 flights over the next two months. Meanwhile, Cathay Pacific has introduced new jet fuel surcharges on most routes, while Air France-KLM said it would raise ticket prices to offset rising fuel costs.
Kathleen Brooks, research director at trading group XTB, warned that persistently high oil prices could have serious economic consequences.
“The longer the oil price remains elevated, the more damaging and long-lasting the inflation shock will be for the global economy,” she said.
Financial markets also reacted negatively to the developments. Major indices on Dow Jones Industrial Average fell by more than one percent at the opening bell on Wall Street.
Most European stock markets traded lower during the afternoon session, while the majority of Asian markets closed in negative territory.
At the same time, the US dollar strengthened against many rival currencies. Victoria Scholar, head of investment at Interactive Investor, said the dollar’s rise was driven by safe-haven demand, inflation concerns, and expectations that interest rates could remain higher for longer.