World crude oil prices surged 4% on Wednesday, with Brent futures hitting $94.76 per barrel while West Texas Intermediate (WTI) rose to $87.61. The aggressive rise was driven by the 11th consecutive nightly series of airstrikes by the US military on Iranian military facilities.
US Secretary of State Marco Rubio confirmed that control of the Strait of Hormuz remains the main reason for the failure of peace talks between Washington and Tehran. He claimed that Iran had violated the terms of the Memorandum of Understanding signed last month and stressed that the US will not allow Tehran to dominate the international energy shipping lane.
The latest operation by the US Central Command (CENTCOM) targeted Iranian military operations centers, aircraft shelters, drone storage facilities, and logistics infrastructure. The military measures were taken to disable Iran's ability to continue disrupting commercial shipping traffic in the region.
As oil prices surged above $90 a barrel, financial analysts warned of the dangers of a global stagflation shock. The development also prompted Wall Street investors to reassess the likelihood that the Federal Reserve (Fed) might need to raise interest rates to stem renewed inflationary pressures.
In addition to the crisis in the Middle East, global oil supply risks have also been affected by disruptions to the operations of Russia's CPC terminal in the Black Sea, which handles oil exports from Kazakhstan. The tanker attack's suspension of loading threatens production capacity by up to 1.7 million barrels per day, adding to pressure on international energy markets.
