Oil prices surged on Friday following reports that production has halted at an oil field in the Kurdistan Region of Iraq operated by a U.S. Company, due to what authorities are calling a “terrorist attack.” Simultaneously, traffic remains suspended in the Strait of Hormuz, adding to market concerns.
A security source told France Press that “two drones targeted” the oil field Thursday evening, which is operated by HKN Energy in the Sersink area of Dohuk province. The incident has raised concerns about regional stability and potential disruptions to global oil supply.
As of 12:25 GMT, Brent crude futures for delivery in May were trading at $88.86 per barrel, a 4.04% increase and the highest level since April 2024. West Texas Intermediate crude futures for April delivery reached $85.48 per barrel, up 5.52%.
Several oil facilities have been targeted since the start of the conflict in the Middle East, and the closure of the Strait of Hormuz – a critical waterway for approximately 20% of global oil production – has created supply issues in global markets. This latest disruption is exacerbating those concerns.
“A curtailment of oil production and a new reduction in refinery activity, particularly in Asia and the Middle East, could occur soon,” if the crisis isn’t resolved quickly, according to analyst Hamayon Falakshahi of Kepler. He noted limited storage capacity as a contributing factor.
Falakshahi added that Saudi Arabia and the United Arab Emirates can partially circumvent the Strait of Hormuz, “but even with these alternative options, approximately 8.7 million barrels per day remain stranded.”
In an effort to prevent potential shortages, China has reportedly asked its major refining companies to suspend exports of diesel and gasoline, according to Bloomberg.
The U.S. Government similarly authorized, on Thursday, a one-month period for “delivery of Russian-origin crude oil and petroleum products” to India, which is being impacted by the Middle East conflict.
Arne Lohmann Rasmussen, an analyst at Global Risk Management, observed that refined products like diesel and kerosene “have seen a much larger price increase” than crude oil so far.
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