Iran War Pushes Oil Past $100 as Saudi Arabia Announces Production Cuts
Leslie Palti-Guzman, Founder at Energy Vista, examines geopolitical risks to oil and gas production as Saudi Arabia announces production cuts.
Oil smashed through $100 a barrel as Saudi Arabia joined other major Middle East producers in cutting output, with a standstill of tanker traffic through the vital Strait of Hormuz choking off supplies to the rest of the world.
Saudi Arabia is beginning to cut oil production as its storage tanks fill up, according to a person familiar with the situation, following similar moves in neighboring countries. The Kingdom has been diverting supplies via a pipeline to the western Red Sea port of Yanbu, but doesn’t have enough capacity to fully replace export volumes that typically transit through Hormuz.
The war in the Middle East is showing no signs of abating after US and Israeli strikes on Iran more than a week ago, and the fallout is stoking fears of an inflation crisis. The halt to shipping through Hormuz — a narrow waterway that normally handles a fifth of the world’s oil — along with attacks on key energy infrastructure have also driven up prices of natural gas and diesel.
(Thumbnail Illustration: Daybreak/Getty)
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