Oil rises above US$100 a barrel as Middle East war and Hormuz disruption hit supply

Oil prices climbed above US$100 a barrel on Sunday in futures trading, reaching their highest levels since 2022 as the war in the Middle East, the effective closure of the Strait of Hormuz and fresh production cuts among Gulf producers tightened supply expectations. Reuters reported Brent rose as high as US$111.04 a barrel while West Texas Intermediate (WTI) touched US$111.24 in early trading. AP later put Brent at US$107.97 and WTI at US$106.22, both more than 16% above the previous close.

The Strait of Hormuz, between Iran and Oman, is one of the world’s most critical energy chokepoints. About 20% of global oil flows through it, along with a significant share of liquefied natural gas trade. The disruption to tanker traffic moved back to the center of market attention as the war entered its second week and widened the risk to Gulf ports, terminals and shipping lanes.

The supply impact is already visible across the region. Iraqi output from its main southern fields fell by about 70%, to roughly 1.3 million barrels per day from 4.3 million before the conflict, while exports also dropped sharply. AP added that Kuwait announced precautionary cuts to production and refining, while the United Arab Emirates said it was carefully managing some offshore output because of storage and shipping constraints.

The escalation has also spread to energy infrastructure inside Iran. Reuters said the expanding war had increased fears of prolonged supply disruption even if the conflict were resolved quickly, because of damage already inflicted on facilities and the higher risk to commercial shipping. That combination of tighter supply, higher logistics costs and a larger geopolitical premium helped push crude sharply higher.

U.S. President Donald Trump reacted to the oil rally with a Truth Social post, saying it was “a very small price to pay” for “security and peace in America and for the world.” The rise in crude prices has already started to spill into broader energy markets and to reinforce inflation concerns in importing economies.

For Argentina, oil above US$100 a barrel would in principle improve crude export revenues, though it also raises pressure on fuel prices and domestic energy costs. At the same time, higher gas and fertilizer costs linked to the Gulf crisis are adding strain to agricultural and logistics chains, a factor markets are also watching as they assess how long tanker traffic through Hormuz may remain disrupted.