Category World News

Oil prices rose over the weekend after the US attacked Iran’s nuclear facilities, hitting a five-month high. The US Al Udeid Air Base in Qatar was attacked by Tehran in retaliation, which has hampered global energy markets.

However, after it appeared that Iran was holding off further attacks for the time being, including avoiding closing the Strait of Hormuz, a crucial chokepoint in global trade, oil prices sharply dropped on Tuesday.

Brent Crude, the world’s benchmark for oil prices, has fallen more than 5.6 percent so far in the day’s trading and is currently trading at about $66 per barrel.

Still a concern is the closure of the Strait of Hormuz.

The Strait of Hormuz closure might be one of Iran’s most significant potential retaliatory economic measures.

The trade corridor between Europe and Asia is crucial because it supplies 20% of the world’s oil supply and serves as a major transit route.

The Supreme National Security Council of Iran has the final say over a proposal to close the strait, despite the country’s parliament backing it.

Iran has previously threatened Iran in the past, including in 2018 during US President Donald Trump’s first term following US withdrawal from the Iran nuclear deal that was brokered by former US President Barack Obama.

The strait, which is only 33 kilometers (21 miles) wide at its narrowest point, could be closed, and it could even be used to attack or seize ships. The Revolutionary Guard recently seized ships it claimed to have smuggled diesel. In the 1980s, similar strategies were employed in the Iran-Iraq War.

Although analysts believe there is enough spare capacity to at least partially offset the immediate impact, closing the Strait would cause a swell in global markets. The risk of additional volatility persists, similar to the disruptions to the energy market in 2022 brought on by Russia’s invasion of Ukraine.

If the Strait is closed, crude oil prices could top $80 per barrel, according to HSBC analysts. It could be worth ten dollars, according to Goldman Sachs.

However, the US airbase strike on Qatar actually sabotaged global markets because it suggested that Tehran’s arsenal prioritized economic retaliation.

An oil tanker would sink in the Straits of Hormuz if Iran were serious about retaliation. In a post on the social media platform X, senior fellow at the Brookings Institution, Robin Brooks, stated that the fact that it isn’t acting means that it is bent.

Moment of flux

The oil market was already in a state of flux before the conflict. As part of a strategy to unwind voluntary output cuts after the COVID pandemic, OPEC agreed to increase production by up to 411, 000 barrels per day for the month of July.

There are other ways to lessen a supply shortage’s impact.

According to Third Bridge Capital’s analysis, the production capacity of OPEC+’s OPEC+, primarily in Saudi Arabia and the United Arab Emirates, could quickly add 2.5 million barrels per day to the market, with up to 5 million more available over the long term.

If global oil supplies are hit before it ultimately has an impact on gas prices, that could save time.

Due to the current global sanctions against Iran, the country currently accounts for 4 percent of the world’s oil supply. The majority of this is exported to China.

According to Peter McNally, the global head of Sector Analysts and global sector lead at Third Bridge Capital, “It’s difficult to see how Iran would push more barrels into the market given the current environment, since a lot of their supply ultimately goes to China.”

Iran exports about 1.6 million barrels of oil annually, accounting for nearly 90% of those exported by China. According to Abigail Hall Blanco, professor of economics at the University of Tampa, China is already grappling with US tariffs and will suffer from a downward trend in energy prices.

Oil markets have a lot of interconnectedness. And so, Hall Blanco told Al Jazeera, “you would see those effects on the US and other markets as well” if the price of oil rose globally as a result of a closure or restriction of oil tankers passing through the strait.

Trump stated earlier this morning that China could continue to purchase Iranian oil, indicating a change in US policy since Trump has so far attempted to stop Iran’s oil exports. According to Reuters news agency, he had also imposed sanctions on several of China’s so-called “teapot” refineries and port terminal operators in relation to purchases of Iranian oil.

Regional producers are in the process of preparing for any fallout. The state-run Basra Oil Company in Iraq has begun evacuating foreign employees because it fears Iranian action against US forces stationed there.

Western businesses are also taking precautions. The number of people on-site has decreased because BP collaborates with Iraq’s Basra operation, which produces 3.32 million barrels of oil annually. The business claims that output won’t be impacted. BP’s stock is down 1.4 percent as of 3 p.m. EST in New York at 3 p.m.

Producers outside of OPEC+ could increase output to help bridge any supply gaps, such as those in Brazil, Canada, Guyana, and the US. However, according to experts, other nations take longer to make those moves, with the exception of the US and Canada.

The US’s lead time is merely a little longer than everyone else’s, according to the statement. Less of a quick response to higher prices is possible. The growth will continue. The quickest [way] to increase production is either Saudi Arabia, the UAE, or the US, McNally said, via Iran and the Strait of Hormuz, if there is a supply outage. However, the non-OPEC supply will continue to meet the majority of the growth in demand over the long term.

Non-OPEC nations have significantly increased production over the past ten years, a trend that is expected to continue. According to the Energy Information Administration (EIA), non-OPEC sources will account for 90 percent of oil production growth this year (PDF).

Additionally, the US currently has access to a 402.5 million barrel strategic petroleum reserve. In situations where production is sluggish due to global emergencies, the reserve can be used.

At current levels, it will cost $20 billion and take several years to refill the strategic reserve, despite the fact that the US produces more oil than any other nation in the world.

Trump faces a political hazard.

Trump on Truth Social said, “Everyone, KEEP OIL PRICES DOWN, I’m WATCHING,” in all caps on Monday.

Trump campaigned for lowering the cost of common goods. However, his erratic trade practices and tariffs have increased prices. Food prices have increased by 2.9 percent over the last year, according to the most recent consumer price index report, a crucial indicator used by the central bank to gauge inflation.

However, the Trump administration has remained focused on oil, with prices falling, among them gas prices, by 12% from the same period last year.

However, as prices fluctuate, that could change very quickly.

Donald Trump, the president of the United States, said that he opposes a regime change in Iran and that it is “the last thing Iran’s mind is right now.” After 12 days of hostilities, Israel and Iran are finally at peace.

Israel and Iran are required to adhere to their agreed ceasefire, according to US President Trump.

England won their first Test match against India with a sensational five-wicket score in the title match, reaching a target of 371 – the 10th most successful run chase in Test history.

England appeared to be cruising to a dramatic victory on Tuesday after turning the cricket match on its head at Headingley after India had won by 430-3 in their opening test match.

At lunch, Duckett and Crawley’s opening duo 117-0 eased their side into the break.

Before Crawley fell for 65, Duckett continued his impressive form with four more victories under the covers to reach his sixth Test hundred.

The second-highest opening fourth-innings partnership between England and England in Tests was 188-runs.

India was reintroduced into the thrilling contest by Harry Brook and Duckett taking two wickets in two balls. England’s chances of winning were pampered by the fact that Ben Stokes had to fall for 33 in a desperate reverse sweep.

With the former skipper and Jamie Smith hitting a six in the opening match to bring England home after scoring five centuries in the match, India somehow managed to start the five-test series in disarray. Joe Root’s unbeaten 53 eased the nerves around his home ground.

What a Test match, that is unbelievable. We had a lot of runs, Duckett said, and the weather was perfect. I can’t come up with words.

We only had to look at the scoreboard to determine whether or not to bat the overs. The breaks in the game kept us calm during times when I thought about switching gears.

It’s important for us to win this series by opening it up with a score of 1-0. In the dressing room, there was a sense of calm. It’s relatively simple to be calm when Root is present.

Crawley and Duckett took 99 balls to increase their 50 partnership, which is the longest the pair have ever had for England, before raising the stakes at day five, which was unusual for a team known for its ultra-aggressive batting, before going back on 21-0.

When first-innings centurion Ollie Pope quickly followed Crawley back to the pavilion midway through the afternoon session, the number three falling to Prasidh Krishna’s next victim in back-to-back overs, there was a slight concern for England.

However, Duckett continued to add runs quickly before attempting one big shot too many, falling to Shardul Thakur for 149, the second-highest score in an English opener’s fourth-innings.

It has been 15 years since an England opener last scored a fourth-innings hundred, Alastair Cook at Mirpur in 2010, so Duckett’s contribution is unquestionable in such a pressurized setting.

When Brook left for a golden duck, two in two balls for Thakur, and England’s edgy appearance, a few more frights followed.

After drinking tea, Root and Smith both dug in, stopped offering up chances, and scored the runs needed, with Smith completing a remarkable victory in style. Stokes was left shaking his head as he fell to Ravindra Jadeja shortly after.

India ultimately lost due to numerous dropped catches and two batting collapses. The final seven wickets were lost by them for just 41 runs, with the tail crumbling once more in the second innings. The final six wickets totaled 31 runs as a result of their 430-3 defeat.

For the first time in cricket history has a team managed five centuries in a single Test and not triumphed, and it’s also the first time six batsmen have joined them in a match that included three ducks-for-ducks in each innings.

India’s captain Shubman Gill said, “We had our chances.” I’m proud that we lost a few dropped catches and that the lower order didn’t contribute as much as we would have liked, but that’s okay. Our young team is developing.

In this match, it simply didn’t go our way. In the upcoming matches, we must correct [the batting collapses].

With their aggressive approach, even if it has been toned down and refined, allowing England to achieve their second-highest run chase in Test history, the team could not have gotten off to a more promising start as they approached the Ashes later this year.