WTI Crude Tops $85 a Barrel as War Paralyzes Hormuz Traffic

US crude futures topped $85 a barrel for the first time in almost two years as the war in the Middle East unleashed a wave of disruption across energy markets, with shipping through the Strait of Hormuz at a near-total halt.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — US crude futures topped $85 a barrel for the first time in almost two years as the war in the Middle East unleashed a wave of disruption across energy markets, with shipping through the Strait of Hormuz at a near-total halt.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.West Texas Intermediate added as much as 6.4% in New York, while the global Brent benchmark is up more than 20% this week. The benchmarks surged even after US President Donald Trump signaled “imminent action” to reduce pressure on prices and the Treasury Department eased curbs on India’s ability to buy Russian oil. With no sign of a let-up in hostilities, Goldman Sachs Group Inc. flagged the risk of scenarios for oil topping $100 a barrel if disruption were to extend; European diesel futures headed for a weekly gain of more than 50%; and central banks signaled their unease about a possible resurgence in inflation. Qatar’s energy minister warned that oil could hit $150.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.There has been a “near-total” pause in commercial traffic through Hormuz, according to the Joint Maritime Information Center, a multinational naval advisory group. The collapse stems from “security threats, insurance constraints, operational uncertainty, and effective disruptions,” it said.Oil markets have been rocked by the conflict, which has ensnared about a dozen nations since the US and Israel launched their campaign on Feb. 28. As the hostilities have flared, shipping through the key strait has all but ended, choking off oil supplies to global markets and prompting producers to start shutting-in output. Refineries and tankers have been hit.Qatar’s energy minister told the Financial Times that crude could soar to $150 a barrel in two to three weeks if tankers and other merchant vessels were unable to pass through Hormuz.Iranian Foreign Minister Abbas Araghchi told NBC News his country had no intention to negotiate and was ready for a ground invasion, although Trump commented later to the same station that he was not thinking about such a move. Iran fired a barrage of missiles and drones targeting countries across the Persian Gulf overnight, while Israel renewed airstrikes on the Islamic Republic.The prospect of a drawn-out conflict has put the market on edge. Last year, about 20 million barrels of oil and petroleum products flowed through the Strait of Hormuz every day, according to a tally from the International Energy Agency. Ship-tracking data this week has suggested marine traffic through the artery has collapsed.With importers struggling to get barrels, the US Treasury Department’s Office of Foreign Assets Control issued a short-term waiver to allow India to buy Russian crude. The move “only authorizes transactions involving oil already stranded at sea,” Treasury Secretary Scott Bessent said.Indian refiners have already bought more than 10 million barrels of Russian crude, according to people with direct knowledge of the deals. Much of that may have been purchased even before the one-month waiver announced late Thursday in Washington. India’s Reliance Industries Ltd. is seeking to buy Russian oil, a person familiar with the matter said.Goldman Sachs warned that a prolonged disruption at Hormuz — which links the Persian Gulf to global markets and typically carries about a fifth of global oil flows — could lift prices far higher, although the bank’s base case at present is for a gradual recovery of shipments and futures to average $76 a barrel in the second quarter.“Let’s say you have another five weeks of very low flows of oil through the strait,” Samantha Dart, the co-head of global commodities research at the Wall Street lender, told Bloomberg Television, speaking before the JMIC advisory was issued. “It is possible we would see Brent prices cross the $100-per-barrel threshold.”US Interior Secretary Doug Burgum said the administration was weighing a range of options for addressing the spike in oil and gasoline — with US pump prices hitting $3.32 gallon on Thursday, the highest highest since 2024. “Everything is being considered,” Burgum said, adding that the list included actions that would have immediate impact as well as longer-term, more complex moves. Possible decisions includes a release from the country’s emergency oil inventory, potentially in coordination with other nations to maximize effect. Administration officials, however, have so far not moved to tap the Strategic Petroleum Reserve, a cache of crude held in vast underground caverns.In Asia, signs of strain for top economies are mounting. China has told major refiners to suspend exports of diesel and gasoline, reflecting efforts to prioritize domestic needs. Elsewhere, Japanese refiners asked their government to release oil from strategic reserves.As the conflict widens, constraining supplies from the Middle East, Saudi Arabia raised the price of its main oil grade for buyers in Asia for April by the most since August 2022. Riyadh is also diverting millions of barrels to its Red Sea ports to avoid the Strait of Hormuz.Product prices have soared. In Europe, low-sulfur gasoil futures have rallied 50% on ICE Futures Europe so far this week, the biggest move on record.In a sign of near-term tightness, Brent’s prompt spread — the difference between its two nearest contracts — widened to $5.11 a barrel in backwardation, a bullish pattern. A month ago, it was 58 cents.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.