After the attack on Iran by America and Israel, a sharp increase in the prices of crude oil has been seen. As the threat of war and supply disruption increases, the oil market begins to fluctuate. Oil and gas companies get direct benefit from this. But the question is, will this advantage last for a long time and will companies invest heavily in new projects?
When tension increases in any large area of ​​the world and there is a fear of stopping the oil supply, prices increase rapidly. This also happened during the Russia-Ukraine war. In the third quarter of 2022, ExxonMobil and Chevron together earned a profit of more than $30 billion because oil and gas prices were high at that time.
Rise in crude oil prices
In the recent situation, Brent crude oil went above $ 85 per barrel for some time. Natural gas prices in Europe also reached the highest level since 2023. The main reason for this is the almost closure of the Strait of Hormuz. About 20 percent of the world’s crude oil supply passes through this route. The pressure in the gas market has also increased due to Qatar stopping LNG production.
Experts say that if prices remain high for a long time, only then will companies decide to dig new oil wells or start big projects. Big projects involve huge investments and may take months or years to start. According to Dan Pickering, if Hormuz remains closed for a long time, the price of oil may go up to $ 100 per barrel, but this is not yet decided.
US Navy will protect oil tankers: Trump
US President Donald Trump has said that if needed, the US Navy will protect oil tankers and insurance assistance will also be provided to shipping. After this statement, the prices softened a bit. If America, China or other countries release their emergency oil reserves in the market, the prices may come down further. At present the market is considering this as a short term problem.
The US oil and gas industry will certainly benefit from higher prices, but they cannot immediately make up for the Middle East’s supply shortage. America’s Gulf Coast refiners are earning better profits than before as demand for petrol and diesel has increased. LNG exporters have also benefited.
