U.S. crude prices topped $100 per barrel Sunday evening, as the Trump administration weighs military strikes on OPEC member Iran’s key oil export facilities on Kharg Island.
U.S. crude oil rose 2.64% to $101.32 per barrel by 6:15 p.m. ET. Brent prices, the international benchmark, were up 2.94% to $106.17 per barrel.
President Donald Trump ordered strikes Friday against Iranian military assets on Kharg Island. Trump said the strikes had left oil infrastructure unscathed. But he warned that the U.S. would consider hitting crude facilities on the island if Iran continued to attack tankers in the critical Strait of Hormuz.
The White House plans to announce as soon as this week that multiple countries have agreed to help escort oil tankers through the Strait, U.S. officials told The Wall Street Journal. But they are still discussing whether such an operation would start before or after the war ends, the officials told the Journal.
The U.S. ambassador to the United Nations, Mike Waltz, reiterated Trump’s threat to strike oil infrastructure on the island. About 90% of Iran’s oil exports are shipped from there, according to JPMorgan. Iran produced about 3.2 million barrels per day in February, according to OPEC data.
“He deliberately hit the military infrastructure only, for now,” Waltz told CNN in an interview Sunday. “And I would certainly think he would maintain that optionality if he wants to take down their energy infrastructure.”
The U.S. strikes on Kharg Island and Trump’s threat to hit Iran’s oil infrastructure mark a major escalation in the war, said Natasha Kaneva, head of global commodity strategy at JPMorgan, in a Friday note to clients.
A direct strike on Iran’s export terminal on the island would immediately halt the bulk of its crude exports of 1.5 million bpd, Kaneva said. This would likely trigger “severe retaliation” by Iran “in the Strait of Hormuz or against regional energy infrastructure,” she said.
Iranian attacks on oil tankers in the Persian Gulf have already basically halted traffic through the Strait, the most important trade route for the global crude market. About 20% of the world’s oil supply passed through the narrow waterway prior to the war.
The closure of the Strait, which connects the Gulf to the world market, has triggered the biggest oil supply disruption in history. Oil prices have risen more than 40% since the U.S. and Israel attacked Iran three weeks ago. Brent closed above $100 for the first time in four years last week.
Prices are rising despite the decision by more than 30 countries to release 400 million barrels of stockpiled oil to address the supply disruption. It is the largest such action in history. The U.S. will release 172 million barrels from its Strategic Petroleum Reserve as part of the effort.
The Paris-based International Energy Agency, which is coordinating the effort, said Sunday that Asian nations will start releasing emergency oil supplies immediately. Countries in the Americas and Europe will start releasing their stockpiles by the end of March.
U.S. Energy Secretary Chris Wright said Sunday there’s no guarantee that oil prices will fall in the coming weeks.
“There’s no guarantees in wars at all,” Wright told ABC News in an interview. “I can guarantee the situation would be dramatically worse without this military operation to defang the Iranian regime.”