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New York: There was a sharp rise in crude oil prices in the global market on Monday due to the war situation in West Asia after the coordinated attacks by America and Israel on Iran. There was uneasiness among businessmen due to the fear of disruption in the energy supply chain. Traders are betting on fears that crude oil supplies from Iran and other countries in West Asia may slow or stop. Attacks in the region, particularly on two ships passing through the Strait of Hormuz, the narrow entry way to the Persian Gulf, have hampered export potential.

Energy sector experts believe that if the attacks in West Asia continue for a long time, the prices of crude oil and petrol and diesel may increase further. US-produced West Texas Intermediate (WTI) crude oil was trading at around $72 a barrel on Monday morning, up about 7.3 per cent from Friday’s level of around $67. International benchmark Brent crude reached $78.55 a barrel, up 7.8 percent from Friday’s $72.87. Friday’s level was the highest in seven months.

Energy analysis company Rystad Energy said about 15 million barrels per day of crude oil, or about 20 percent of global supply, passes through the Strait of Hormuz. This oil route is considered to be the world’s most important ‘chokepoint’ (narrow strategic route). Iran is located to the north of the Strait of Hormuz, while oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, United Arab Emirates (UAE) and Iran are exported through this route. Iran temporarily closed parts of the strait in mid-February, citing military exercises. After that, oil prices had increased by about six percent.

Meanwhile, eight members of ‘OPEC Plus’, a group of oil producing countries, announced on Sunday to increase oil production. The Organization of Petroleum Exporting Countries (OPEC) said it is going to increase production by 2,06,000 barrels per day in April. Countries increasing production include Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman.

“About a fifth of global oil supply passes through the Strait of Hormuz. So the market is more concerned about whether crude oil shipments will actually be able to get through,” said George Lyon, senior vice president at Rystad Energy. “If movement in the Gulf region is disrupted, immediate relief from additional production will be limited,” said George Lyon, senior vice president at Rystad Energy. Iran exports about 1.6 million barrels of oil per day, most of which goes to China. If these exports from Iran are disrupted, China may have to look for alternative supply sources, which could put further pressure on global energy prices.