ExxonMobil CEO Darren Woods describes the impact of the Center East battle on the worldwide oil market on ‘Particular Report.’
If the escalating battle between Israel and Iran considerably cuts provide within the world oil market, costs may surge to as a lot as $120 a barrel because of a possible risk to a major delivery lane, based on business consultants.
The worth of West Texas Intermediate, a key crude oil benchmark, is sitting round a one-year excessive, whereas world benchmark Brent Crude is nearing a five-month excessive Wednesday because the battle between Israel and Iran enters its sixth day.
President Donald Trump met together with his nationwide safety crew Tuesday to debate the escalating battle, sparking hypothesis the U.S. might be making ready to hitch the assault, creating extra volatility available in the market, based on Ewa Manthey, commodities strategist at ING Monetary Service.
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Smoke billows for the second day from the Shahran oil depot, northwest of Tehran, June 16, 2025. (Getty Photos / Getty Photos)
However Manthey mentioned the “key worry for the market” is the potential for disruption to delivery by means of the Strait of Hormuz, a crucial waterway that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The waterway shouldn’t be solely extensive sufficient to deal with the world’s largest crude oil tankers. It’s thought-about one of many world’s most essential oil chokepoints, based on the Power Data Administration (EIA).
ExxonMobil CEO Darren Woods echoed these considerations, saying that whereas world oil provide is ample to face up to a disruption to Iranian exports, the larger concern is the potential influence on oil shipments by means of that waterway, which strikes virtually a 3rd of worldwide seaborne oil commerce.
A plume of heavy smoke rises from an oil refinery in southern Tehran after it was hit in an in a single day Israeli strike June 15, 2025. (Atta Kenare/AFP through Getty Photos / Getty Photos)
In 2024, 20 million barrels of oil per day, about 20% of worldwide petroleum liquids consumption, flowed by means of the waterway. There are additionally only a few different choices to maneuver oil out of the strait whether it is closed, based on the EIA.
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A big disruption to those flows could be sufficient to push costs to $120 per barrel, based on Manthey. But when disruptions persist towards the tip of the 12 months, she famous that Brent may commerce to new report highs, surpassing the report excessive of near $150 per barrel reached in 2008.
“If this occurs, we would need to see governments tap into their strategic petroleum reserves,” Manthey mentioned, noting that it contains the U.S., which sits on greater than 400 million barrels of crude oil in its strategic petroleum reserves.
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Manthey mentioned one other resolution could be if the Group of the Petroleum Exporting Nations (OPEC+) tapped into its spare manufacturing capability of greater than 5 million barrels per day.
“While they are in the process of bringing supply back online, a disruption to Iranian supply may prompt them to bring this supply back at an even quicker pace,” Manthey mentioned.
