The oil and gas crunch caused by the war between the U.S., Israel, and Iran, has cost global businesses $25 billion, Reuters reported today, adding that the bill is going to climb higher still.
The publication analyzed corporate statements issued after the war started, finding that as many as 279 companies had cited the war as a reason for defensive actions, including price hikes and production cuts to cushion the blow from soaring oil and gas prices.
Other companies from Reuters’ sample had opted for suspending dividend payments and share buybacks, along with furloughing employees and introducing fuel surcharges to cope with the tighter supply.
The Reuters analysis comes out as oil prices surge higher after President Donald Trump’s latest warning to Iran, issued on Sunday, and the news about drone attacks on the UAE and Saudi Arabia. In the UAE, a drone damaged a generator at a nuclear power plant, while Saudi Arabia said it had intercepted three drones that came from Iraqi airspace.
As a result, earlier today, Brent crude topped $111 per barrel, with West Texas Intermediate trading at over $107 per barrel. The latest price developments also reflect a growing nervousness about possible shortages of oil and gas, despite assurances from some governments that there is plenty in storage. The problem with storage is that drawdowns then need to be replaced with fresh oil and gas, and with over 10 million barrels daily in Middle Eastern production suspended, the replacement would be a challenge.
ING commodity analysts said earlier today that there have been signs of a pickup in tanker activity in the Strait of Hormuz, with Iran reporting 30 vessels in total being allowed to pass the chokepoint over two days last week, and Reuters reporting today a supertanker carrying Iraqi oil also clearing Hormuz and en route to Vietnam. However, as ING’s team noted, “this can change quickly.”
By Irina Slav for Oilprice.com
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