Oil prices on exchanges, which approached a record high of $120 per barrel on Monday and caused widespread panic, fell again below $90 on Tuesday, still above the $65 recorded before the start of the bombings in Iran, Latvijas Avīze reports.
After a sharp rise, natural gas prices have also fallen. However, observers say the situation remains unstable, and potential energy supply issues in Europe have not gone away.
The restoration of safe navigation in the Strait of Hormuz, which is strategically important for vessels transporting oil and liquefied gas from Saudi Arabia, Bahrain, Iraq, Kuwait, Qatar, and the United Arab Emirates (UAE) to leave the Persian Gulf and enter the Indian Ocean, will be of great significance. Until recently, one-fifth of the world's total volume of crude oil and liquefied natural gas was transported through this waterway.
At its narrowest point, the Strait of Hormuz is only 39 kilometers wide. To the north, it borders the Iranian coast. Since the beginning of Israeli and American airstrikes on Iran and the sinking of several vessels, navigation in the strait has virtually ceased. Only a few dare to pass through an area that Iran is targeting with missiles and drones. Therefore, there is no guarantee that energy prices will not rise again in the near future.
Although U.S. President Donald Trump managed to calm the market by stating in an interview with CBS on Monday that the war with Iran is "largely over" and threatening to "seize" the Strait of Hormuz if Tehran continues to block it, in reality, little has changed. When airstrikes on Iran began on February 28, the U.S. president and other officials claimed that the war could last a maximum of six weeks. Now we are in the second week. The Iranian regime has not been overthrown, bombings continue, and Iranians are responding, including strikes on oil refineries in Arab countries. Saudi Arabia, Qatar, and the UAE have halted or limited oil production as tanks are full and oil cannot be exported. Due to the bombings, liquefied gas production in Qatar has been suspended.
The most pessimistic forecasts suggest that if normal shipping in the Strait of Hormuz is not restored by the end of March, oil prices on exchanges will exceed $150 per barrel. This would certainly trigger a chain reaction across all sectors of the economy. However, French President Emmanuel Macron spoke this week about France's readiness to restore normal navigation in the Strait of Hormuz along with its allies, but this concerns the escort of tankers and container ships only after the "most acute phase of the conflict" has ended.
Global media report fuel problems in Vietnam, Bangladesh, the Philippines, and Myanmar, measures to stabilize the fuel market, and the consideration of using oil reserves in South Korea and Japan. European Union officials are currently saying that the crisis is having only a limited impact on Europe. At an emergency video conference of finance ministers from the G7 countries and the International Energy Agency held earlier this week, it was decided not to begin stabilizing prices by releasing strategic reserves, as was done in 2022 when Russia invaded Ukraine.
