Monday is predicted to see a sharp increase in oil prices as investors are alarmed by the US-Israel war on Iran and the effective closure of the vital passage of Hormuz, even though major producers have promised to boost production.
According to data from the broker IG, US crude is expected to increase by 11% when trading begins. The increase coincides with an agreement on Sunday by the oil producers’ cartel, Opec+, to increase production by more than anticipated as it evaluated the conflict’s effects.
According to reports, Iran’s Revolutionary Guards ordered ships on Saturday that they could not sail through the strait of Hormuz, thereby closing the main choke point and causing some oil exports to stop.
20% of the world’s oil supplies and almost $500 billion (£372 billion) in energy trade flow across the strait annually. Additionally, vessels transport fertilizers and chemicals, so disruptions could affect agriculture and global food prices.
At a time when many people are already concerned about the economy, the longer the war interrupts the energy trade, the greater the chance that consumers may have to pay more for a wide range of goods, not just gas. President Trump, whose favor ratings have fallen due in part to the fact that many Americans are worried about inflation, may suffer domestic political repercussions as a result.
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