Global oil prices continued to rise sharply on Thursday as Brent crude oil crossed the $100 per barrel mark for the first time in weeks. The increase came after growing security concerns in the Red Sea raised fears about possible disruptions to global oil supplies and important shipping routes.
At the time of reporting, Brent crude was trading at $100.10 per barrel, gaining $6.07 or 6.45 percent during the day. Meanwhile, U.S. West Texas Intermediate (WTI) crude oil also increased to $91.49 per barrel, up $4.66 or 5.37 percent.
Over the past 20 days, Brent crude has jumped by around 42 percent, showing how quickly oil prices have risen due to increasing geopolitical tensions in the Middle East.
The latest price increase follows claims by Yemen’s Iran-backed Houthi group, which said it had attacked two Saudi oil tankers near the Bab el-Mandeb Strait. The reported attacks have increased concerns about the safety of ships passing through one of the world’s busiest and most important sea routes.
Because of these security risks, several shipping companies have reportedly started diverting their oil tankers to safer routes. While this helps protect ships and their crews, it also makes journeys longer and more expensive, increasing transportation costs for oil around the world.
The Bab el-Mandeb Strait and the Strait of Hormuz are two of the world’s most important oil shipping routes. Together, these two narrow waterways handle around one-third of all crude oil transported by sea worldwide.
Every day, an estimated 25 to 30 million barrels of crude oil pass through these two routes. If shipping is disrupted in either location, it can slow oil deliveries, reduce supply in global markets, and increase oil prices.
Energy traders and investors are becoming increasingly worried that tensions in the region could continue or even become worse. As a result, many buyers are paying higher prices now because they fear future shortages in oil supplies.
Over the last two weeks, global oil prices have already increased by nearly 20 percent as markets reacted to the growing political and security risks in the Middle East.
Experts warn that if Brent crude remains above $100 per barrel for a long period, it could have a major impact on the global economy.
Higher oil prices usually lead to more expensive petrol and diesel, which increases transportation costs. Businesses may also face higher manufacturing and delivery expenses, which can eventually raise the prices of everyday products and services.
For countries like Pakistan that import large amounts of oil, higher global oil prices can create additional economic pressure. They can increase the country’s import bill, put pressure on foreign exchange reserves, weaken the local currency, and lead to higher fuel and electricity prices for consumers.
Overall, the sharp rise in oil prices reflects growing fears that continued attacks on oil tankers and shipping routes in the Middle East could disrupt global energy supplies. If security conditions do not improve, oil prices may remain high or rise even further, increasing inflation and putting additional pressure on economies around the world.
