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Oil prices surged past $115 (£86.47) a barrel on Monday as fuel shortages sparked rationing and violence in South Asia, with no end in sight to the war choking the world’s most critical energy route.
Brent crude rose to $115.31 (£86.47) a barrel, up 24 per cent from Friday’s close and the highest since 2022, as the US-Israeli war with Iran entered its second week. The Strait of Hormuz remained effectively closed to most operators.
West Texas Intermediate crude hit $116.33 (£87.41), up 28 per cent. Brent has not traded at current levels since Russia invaded Ukraine in 2022.
The surge in energy prices is causing rationing and closure of petrol pumps in import-dependent South Asia. In Sialkot, Pakistan, a man opened fire at a petrol station on Saturday after workers refused to fill jerry cans during panic buying, killing one worker and critically injuring two others. Separately, a man was killed in Karachi in another fuel queue altercation.
Pakistan raised petrol prices by PKR55 (£0.15) per litre on Friday, the largest ever single increase, to PKR321 per litre, after weeks of warnings that its exposure to Hormuz-linked supply was among the highest of any emerging market.
In Bangladesh, authorities on Monday brought forward university Eid holidays as an emergency measure to cut electricity use and ease fuel pressure after Qatar suspended LNG deliveries.
Officials said university campuses consume large amounts of electricity for residential halls, classrooms, laboratories and air conditioning, and the early closure would help ease pressure on the country’s strained power system.
Five of the country’s six fertiliser factories have also closed.
Bangladesh already imposed daily fuel limits last week – motorcyclists are capped at two litres, private cars at ten – after panic buying emptied stations across the country.
« About 95 per cent of our fuel must be imported, » Bangladesh Petroleum Corporation said, urging consumers not to hoard.
Meanwhile, bigger economies are also affected. Japan said on Sunday it had instructed a national oil reserve storage site to prepare for a possible release of crude, the first such directive since 2022. Japan holds 254 days of emergency reserves, one of the highest, but sources 95 per cent of its crude from the Middle East, with roughly 70 per cent shipped through the Strait.
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India, which imports more than 88 per cent of its oil, sought to calm concerns. Oil minister Hardeep Puri said the country held « sufficient stocks » and directed all LPG refineries, public and private, to increase production.
Analysts are now warning that oil prices could exceed $150 a barrel – a level that could be catastrophic for the global economy.
« Oil prices have now gathered all the ingredients for a perfect storm, » Muyu Xu, senior oil analyst at Kpler told Reuters. « If the disruption in the Strait of Hormuz persists for another one to two weeks, we could see prices move toward $130–150 a barrel. »
BMI, a unit of Fitch Solutions, said Pakistan and India are the most vulnerable major emerging markets, citing their energy import dependence and high exposure to Hormuz. Egypt and Turkey, it said, face the greatest risk outside the Gulf because of fragile external positions and large energy subsidies.
The shortages comes as Iraq, Kuwait and the UAE have cut oil production as storage tanks fill due to the reduced ability to export through the Strait.
Iran’s parliament speaker Mohammad Bagher Qalibaf warned the war’s impact on the oil industry « would spiral » after Israeli strikes on oil depots in Tehran and a petroleum transfer terminal killed four people overnight.
Roughly 15 million barrels of crude oil, about 20 per cent of global supply, typically pass through the Strait each day, according to Rystad Energy.
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The energy minister of Qatar, one of the world’s largest LNG producers, warned that it expects all Gulf energy producers to shut down exports within weeks if the Iran conflict continues.
« Everybody that has not called for force majeure we expect will do so in the next few days if this continues, Saad al-Kaabi told FT on Friday. « All exporters in the Gulf region will have to call force majeure.”
US energy secretary Chris Wright told CNN on Sunday that gas prices would be back under $3 a gallon « before too long », describing the spike as « a weeks, not a months thing ».
Source:
www.independent.co.uk