International oil prices surged after the United States and Israel bombed Iran's largest gas field and Iran carried out retaliatory attacks on neighboring countries.
On the 18th (local time), May delivery Brent crude futures, the global benchmark, settled at $107.38 per Barrel, up 3.8% from the previous session. April delivery West Texas Intermediate (WTI) futures settled at $96.32 per Barrel, up 0.1% from the previous session.
In particular, Brent crude extended gains after the settlement, rising to the $111 per Barrel range at about 4:48 p.m. Eastern time. It is the first time in 9 days since on the 9th that Brent crude has climbed into the $110 per Barrel range intraday. WTI futures also rose as high as $100.5 per Barrel intraday.
The sharp rise in crude prices that day largely reflected a series of attacks on energy facilities in the Middle East. Israel said it bombed the South Pars, Iran's largest gas field, and a natural gas processing complex in Asaluyeh on Iran's southwestern coast that is directly connected to it.
In retaliation, the Islamic Revolutionary Guard Corps (IRGC) warned that it would attack energy facilities in Saudi Arabia, the United Arab Emirates (UAE), and Qatar and told people to evacuate immediately. In fact, Iran launched missile strikes that day on a cluster of gas facilities in Qatar, which accounts for 20% of global liquefied natural gas (LNG) supply.
With the Strait of Hormuz, through which about 20% of the world's seaborne crude supply passes, effectively closed due to the Iran war, widespread attacks on oil and gas facilities across the Middle East are likely to further worsen disruptions to energy supplies.
Citibank predicted that Brent could rise to $120 per Barrel within days. It also projected supply disruptions of 11 million to 16 million Barrels per day through April. If the Strait of Hormuz is closed for an extended period, it expected Brent to average as high as $130 in the second and third quarters this year.
Gold, considered a representative safe-haven asset, fell instead. According to Reuters, as of 2:58 p.m. Eastern time that day, spot gold was $4,860.21 per ounce, down 2.9% from the previous trading day. With benchmark interest rates still high, gold does not generate interest on its own.