Oil prices are rapidly approaching $100 per barrel as the military conflict between the United States and Iran escalates, reports infohub.kz.
September Brent crude futures on the ICE exchange reached $98.73 per barrel, up 4.954% from the previous close. The rally has continued for five consecutive days amid an exchange of strikes between the warring parties. Specifically, media reported attacks by Yemen's Houthi rebels, who are aligned with Iran, on two Saudi Arabian oil tankers in the Red Sea—Saudi Arabia is a US ally and hosts US military bases—as well as a new wave of US strikes on Iran. Iran's Islamic Revolutionary Guard Corps also reported that an oil tanker caught fire after an explosion while attempting to traverse the Iranian-controlled Strait of Hormuz via a mined southern route. Two other tankers turned back.
Earlier, Iran announced the closure of the Strait of Hormuz, meaning vessels may only pass with Iranian approval. According to Tehran, the United States violated the terms of a temporary ceasefire. Iran has repeatedly stated it would charge fees for transit through the Strait. Before the conflict began, when Israel and the US struck targets in Iran on February 28, about 20 million barrels of oil per day—or 20% of global volumes—passed through the strait. As a result of the conflict, supplies from Iraq, Kuwait, and other countries have dropped sharply. The UAE and Saudi Arabia have ramped up oil production bypassing the Strait of Hormuz, but now the Houthis claim control over the Bab el-Mandeb Strait, which allows oil to be shipped through the Red Sea and Suez Canal to Europe, and through which Arabian oil flows were routed. If this threat persists, oil prices could rise above the levels seen since the start of the conflict, when Brent reached around $120 per barrel.
The new threat to shipping in the Red Sea could disrupt oil supplies of up to 5 million barrels per day and also affect the main export route for Gulf oil that bypasses the Strait of Hormuz, said Saul Kavonic of MST Marquee, as reported by Reuters.
The US military said on July 22 that, on orders from President Donald Trump, it had carried out a new series of strikes on Iran. Additionally, prior to the latest escalation in the Red Sea, Trump threatened to destroy one Iranian bridge or power plant each time Iran opens fire on a vessel in the Strait of Hormuz.
Kazakhstan's budget baseline assumes Brent crude at $60 per barrel. Energy Minister Erlan Akkenzhenov noted in March that oil prices are expected to remain around $80 per barrel, but at $100 per barrel, Kazakhstan could gain an additional $20 billion in the National Fund and budget, which is comparable to the cost of two oil refineries or one nuclear power plant (with a preliminary price tag of $15 billion).