Initial U.S.-Israeli attacks on Iran occurred on Feb. 28, and at press time and nine days into the conflict, the strikes are still ongoing. For the pumps industry, concerns surrounding the war’s impact on oil and gas markets worldwide were immediate. The Strait of Hormuz—which connects the Persian Gulf to the Gulf of Oman and is where a fifth of the world’s oil passes—saw a 70% drop in vessel traffic on the first day of the attacks. On March 2, Iranian Brig. Gen. Ebrahim Jabbari declared the Strait of Hormuz closed.
The eight OPEC+ countries—Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman—met virtually on March 1 as a result of the attacks to review global market conditions and outlook. In a press release, they stated they would increase oil production by 206,000 barrels per day in April. The countries will also “continue to closely monitor and assess market conditions” by holding monthly review meetings, with the next scheduled for April 5.
Oil and gas prices could look drastically different by the time you’re reading this, as the impact of travel for oil tankers in the Strait of Hormuz could cause instability. Hakan Kaya, senior portfolio manager at Neuberger Berman, said, “A full or near-full closure [of the Strait] lasting a month or more would require demand destruction at levels that could push crude well into triple digits and European natural gas prices toward or above the crisis levels seen in 2022.”
Instead, we entered triple digits a week after the closure. At press time, West Texas Intermediate crude oil prices were up 13.2% at $102.90 per barrel and Brent crude oil was up 12.78% at $104.54 per barrel.
Update: As of March 16, West Texas Intermediate crude oil prices are at $93.19 per barrel and Brent crude oil is at $100.18 per barrel.
We will continue to monitor the events unfolding in the Middle East and the effects they have on the industry. Check in for any further updates.
