Brent oil traded as high as US$116 ($165) per barrel last week, gaining 6% over the week.
This comes as reports suggest the US and Israel are planning an attack on Iran. The key concern for global markets is how Iran might respond to any escalation. The Wall Street Journal has cited evidence suggesting Iran is prepared to target civilian sites and infrastructure across the Persian Gulf.
Oil markets remain tight, while high shipping costs are weighing on the global economy. Bloomberg reports that chartering a tanker to transport oil across the Pacific to China now costs US$80 million. The rising costs are contributing to a decline in US oil exports, which have fallen to around seven-year lows. Higher oil prices also come at a difficult time for US President Donald Trump, with midterm elections approaching.
The Financial Times adds that the Strait of Hormuz is not the world’s most dangerous shipping route. That distinction belongs to the Black Sea, a critical corridor for Russian oil exports.
Source: Financial Times
Write to Callum Newman at Mining.com.au
Main image: Unsplash
