Oil prices rose sharply in market trading after the US-Iran attack disrupted global supplies

Oil prices rose sharply when market trading began on Sunday, as The US and Israel are attacking Iran and retaliatory strikes against Israel and US military installations around the Gulf has sent disruptions through the global energy supply chain.

Traders were betting that oil supplies from Iran and elsewhere in the Middle East would slow or even stop. Attacks across the region, including two ships sailing through the Strait of Hormuz, a narrow inlet of the Persian Gulf, could hamper the countries’ ability to export oil to the rest of the world. That could lead to higher crude oil and gasoline prices, according to energy experts.

West Texas Intermediate, the sweet, crude oil produced in the United States, was trading at around $72 a barrel on Sunday night, up about 8% from its trading price of $67 on Friday.

About 15 million barrels of crude oil a day – about 20 percent of the world’s oil – are shipped through the Strait of Hormuz, making it the world’s most important oil outlet, according to Rystad Energy. Tankers crossing the strait, on the northern border with Iran, carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, UAE and Iran.

Iran temporarily closed parts of the strait in mid-February for what it said was a military exercise. Any disruption to that transportation channel could lead to lower supplies and higher oil prices.

Attacks across the region, including two ships sailing through the Strait of Hormuz, a narrow inlet of the Persian Gulf, could hamper the countries’ ability to export oil to the rest of the world. That could lead to higher crude oil and gasoline prices, according to energy experts.

“It’s really supply and demand, a simple economic equation,” lamented CBS News MoneyWatch reporter and “CBS Saturday Morning” host Kelly O’Grady. “If you were to reduce global supply by cutting off the Strait of Hormuz and blocking that oil flow, you would see prices go up.”

In that situation, the eight countries that are part of the oil company OPEC+ announced that they will increase the production of the dirty Sunday. The Organization of Petroleum Exporting Countries, in a meeting organized before the start of the war, said it would increase production by 206,000 barrels per day in April, which was expected by analysts. Developing countries include Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.

“Approximately one-fifth of the world’s oil flows through the Strait of Hormuz, which is an important hub for world trade, meaning markets are more concerned about whether barrels can move than the capacity left on paper,” said Jorge León, Rystad’s senior vice president and head of geopolitical research, in an email. “If the flow to the Gulf is blocked, the additional production will provide limited immediate relief, making access to export routes more important than the objectives of the article.”

Iran exports about 1.6 million barrels of oil per day, mostly to China, which may have to look elsewhere if Iran’s exports are disrupted, which could push oil prices higher.

O’Grady noted that any move to block the Strait of Hormuz would be self-defeating for Iran.

“Remember, Iran’s income mainly comes from oil that it is willing to sell to countries like China that will buy that approved oil. So if they cut off that from other countries and other buyers, they are also doing it for themselves,” he said.

“Now of course, this is Iran’s time. They may choose to go ahead with that. But everyone I talk to says that’s an impossible, extreme scenario. But what you’re going to see are shipping companies saying, ‘I just don’t want to go through there,’ or insurance providers, who are going to raise the price to insure that oil. And all of those things flow down to prices.”