Oil Prices Surge Past $90 as Middle East Conflict Threatens Global Energy Security
Crude oil prices rocketed to their highest levels in months on Friday as the escalating Middle East conflict sent shockwaves through global energy markets, with Brent crude surging 8.5 percent to $92.69 per barrel amid fears of prolonged supply disruptions.
The dramatic price spike comes as the US-Israel war against Iran has virtually paralyzed the critical Strait of Hormuz, through which a fifth of the world's crude oil and liquefied natural gas supplies flow. West Texas Intermediate crude soared more than 12 percent to over $90 per barrel, marking a nearly 30 percent weekly gain.
Trump's Hardline Stance Fuels Market Fears
Market volatility intensified after US President Donald Trump declared that only Iran's "unconditional surrender" would end the Middle East war, dashing hopes for a quick resolution to the conflict that has already disrupted global shipping routes.
"Trump's comments dashed hopes that the conflict will be averted quickly, and the oil price has continued its push higher," explained Kathleen Brooks, research director at XTB.
The prospect of sustained high energy prices has reignited inflation concerns worldwide, potentially limiting central banks' ability to cut interest rates to support economic growth. For the Philippines, which imports nearly all its oil needs, this development could significantly impact fuel costs and overall economic stability.
Regional Production Under Threat
The conflict has already forced production cuts across the region. Attacks on oilfields in southern Iraq and the autonomous Kurdistan region have shut down US-operated facilities, while Kuwait has begun reducing output due to storage capacity constraints, according to the Wall Street Journal.
Maritime traffic through the Strait of Hormuz has nearly ceased, despite Trump's earlier pledge to protect shipping vessels. JPMorgan Chase analysts noted that while such promises may "reduce some of the risk premium in oil markets," they will have "limited impact unless Iran's extensive disruption capabilities are first neutralized."
US Economic Data Adds to Market Woes
Adding to market concerns, US employment data revealed an unexpected loss of 92,000 jobs in February, while retail sales fell 0.2 percent in January. These figures, combined with rising oil prices, have complicated the Federal Reserve's interest rate outlook, with expected rate cuts now pushed back from June to September.
Wall Street's main indices closed down around one percent or more, with European markets following suit. The only bright spot was Boeing, which gained 4.1 percent on reports of a potential major sales agreement with Chinese carriers.
"The longer that key energy infrastructure and shipping routes in the region are affected, the greater the chance of a significant inflationary impact," warned AJ Bell investment director Russ Mould.
For the Philippines, heavily dependent on energy imports, the sustained oil price surge could pressure the peso and increase transportation and electricity costs, potentially affecting the country's economic recovery trajectory.