Oil Prices Hit $90 as Iran War Disrupts Strait of Hormuz Supply

Oil prices reached their highest level since April 2024 on Friday as the ongoing conflict between the United States, Israel, and Iran continues to disrupt global energy supply routes.

Brent crude, the international benchmark, rose 5.41 percent to touch $90.04 a barrel as of 5:56pm UAE time. West Texas Intermediate, the gauge tracking US crude, was 8.02 percent higher at $87.52 a barrel. According to The National, oil prices have been rising since Monday over fears of supply constraints, after Israel and the United States attacked Iran on February 28.

Strait of Hormuz Shipping and Global Oil Supply Impact

The Strait of Hormuz sits at the center of the crisis. The waterway handles approximately 20 percent of global seaborne oil trade and a fifth of global LNG supply. Since the conflict began, tanker traffic through the strait has dropped sharply. According to data from analytics firm Kpler, the number of crude tankers passing through the strait fell by 88 percent, while vessels carrying liquefied petroleum gas dropped by 94 percent.

The IRGC declared the strait closed on March 2, warning any vessel attempting to pass would face consequences. Most commercial operators, major oil companies, and insurers have since withdrawn from the corridor.

JPMorgan Chase analysts noted on Friday that "commercial traffic through the Strait of Hormuz remained virtually nonexistent" on day six of the conflict, adding that the market was "shifting from pricing pure geopolitical risk to grappling with tangible operational disruption."

Since the war began, US crude has surged more than 30 percent. Qatar's energy minister Saad al-Kaabi told the Financial Times on Friday that crude prices could reach $150 per barrel in the coming weeks if oil tankers remain unable to pass through the strait.

Gulf Energy Facilities Targeted, UAE Sites Affected

Multiple energy facilities across the Gulf have been struck or damaged since the conflict began. In the UAE, falling debris from a drone interception caused a fire at the Fujairah Oil Terminal on March 3. The Fujairah port is the world's third-largest hub for petroleum product storage and a critical alternative route for tankers bypassing the strait. A fire also broke out at the Mussafah Fuel Terminal in southwest Abu Dhabi on March 3 after it was struck by a drone. UAE authorities confirmed the Mussafah blaze was brought under control quickly and that operations were not affected, with no injuries reported.

Saudi Arabia's Ras Tanura refinery, which processes 550,000 barrels per day, was forced to halt operations after debris from intercepted drones caused a fire. QatarEnergy suspended production at its Ras Laffan facility, the world's largest LNG plant, which accounts for 20 percent of global LNG supply.

OPEC Response and US Measures to Ease Supply Pressure

OPEC+ pledged to increase oil output by 206,000 barrels per day to help offset the disruption. However, analysts note that a significant portion of Gulf spare capacity relies on the Strait of Hormuz for export, limiting the practical impact of any output increase.

The US Treasury issued a 30-day waiver on Thursday allowing Indian refiners to purchase Russian crude oil loaded on vessels before March 5. US Treasury Secretary Scott Bessent described the measure as a step to "alleviate pressure caused by Iran's attempt to take global energy hostage." The waiver is limited to oil already at sea and is not expected to provide long-term relief.

Senior analyst Ipek Ozkardeskaya noted that benchmarks such as Brent and WTI are tied to real supply and demand, cautioning against assumptions that price rises are speculative.

Iraq has also cut production by 1.5 million barrels per day, according to JPMorgan analysts, who warned that a further 4 million barrels per day overall could be disrupted by the end of next week if the situation continues.