Crude oil prices climbed above $110 a barrel on Sunday after several Middle Eastern producers curtailed output while the Strait of Hormuz remained closed amid the escalating Iran war, fuelling fears of a prolonged supply disruption.
U.S. benchmark West Texas Intermediate jumped about 20% to $109.27 a barrel, while global benchmark Brent crude rose more than 18% to around $110 a barrel. U.S. crude has surged roughly 35% over the past week, marking its largest weekly gain since futures trading began in 1983.
The rally comes as key Gulf producers scale back output due to logistical constraints caused by the closure of the strategic waterway, through which about one-fifth of the world’s oil supply typically passes.
Kuwait, OPEC’s fifth-largest producer, said on Saturday it had implemented precautionary cuts to crude production and refinery operations, citing Iranian threats to the safe passage of ships through the Strait of Hormuz. State-owned Kuwait Petroleum Corporation did not disclose the size of the reductions.
Supply disruptions appear even more severe in Iraq. Output from the country’s three main southern oilfields has fallen about 70% to 1.3 million barrels per day, from around 4.3 million bpd before the conflict, three industry officials told Reuters.
The United Arab Emirates, OPEC’s third-largest producer, said it was carefully managing offshore production levels to address storage constraints, while onshore operations were continuing normally, according to the Abu Dhabi National Oil Company.
Producers across the Gulf are facing mounting storage pressures as tankers avoid the Strait of Hormuz due to security concerns. Shipping companies have become increasingly reluctant to transit the narrow waterway, fearing possible Iranian attacks on vessels.
The conflict has shown few signs of easing. U.S. President Donald Trump said the war was “already won,” while Iranian state-linked reports said Mojtaba Khamenei, the son of Supreme Leader Ayatollah Ali Khamenei, had been named the country’s new supreme leader.
U.S. Energy Secretary Chris Wright said shipping activity through the strait could begin normalising once Iran’s ability to threaten commercial vessels is neutralised.
“We’re not too long away before you’ll see more regular resumption of ship traffic through the Strait of Hormuz,” Wright said in an interview with CNN. “We’re nowhere near normal traffic right now. That will take some time. But again, worst case that’s a few weeks, that’s not months.”
