Dubai Crude Oil Price Breaks Through $150, Middle East Gunfire "Shockwave" Still Transmitting

Why is the Dubai crude oil price leading the way to new highs amid the Middle East conflict?

Southern Finance, 21st Century Business Herald Reporter Wu Bin

As Israel kills a senior Iranian official and Iran attacks energy infrastructure across the Middle East, oil prices continue to rise. On March 17, WTI crude futures increased by 2.9%, closing at $96.21 per barrel; Brent crude futures rose by 3.2%, closing at $103.42 per barrel.

On the evening of March 18, Beijing time, Iran’s South Pars petrochemical facilities were attacked by the US and Israel. After a brief dip, oil prices surged again, with Brent crude temporarily jumping over 3%, once again surpassing the $100 per barrel mark.

The increase in Middle Eastern oil prices is even more pronounced. S&P Global Platts reported that the spot assessment price for Dubai crude oil loading in May reached a record $157.66 per barrel on March 17, surpassing the 2008 high of $147.50 set by Brent futures. Meanwhile, Oman crude futures hit a new high of $152.58 per barrel on the 17th.

Both Dubai and Oman crude prices are trading above $150 per barrel, highlighting the severity of oil shortages in the Gulf region. Middle Eastern oil prices are directly affected by supply disruptions and more effectively reflect marginal supply shortages than Atlantic-related oil prices.

Despite trade stagnation due to Iran’s situation, Middle Eastern benchmark crude prices have soared to historic highs, becoming the most expensive in the world. These benchmark prices are used to price millions of barrels of Middle Eastern oil sold to Asia. The soaring prices are increasing costs for Asian refiners, forcing them to seek alternatives or further cut production in the coming months.

JPMorgan Chase’s commodities chief Natasha Kaneva pointed out that there is a clear disconnect between the current international benchmark crude prices and the Middle East’s geographic location of supply disruptions. Brent and WTI are benchmarks at opposite ends of the Atlantic basin, while the current shocks are concentrated in the Middle East.

The typical voyage from Gulf Cooperation Council (GCC) countries to Asia takes about 10 to 15 days, while shipments passing through the Suez Canal to Europe take 25 to 30 days, and rerouting around the Cape of Good Hope takes 35 to 45 days. Therefore, disruptions in Gulf flow will impact Asian markets sooner and more intensely, while Atlantic basin benchmarks like Brent and WTI will have a longer buffer due to inventory overhang and slower supply adjustments. The US, with a daily crude output of over 13 million barrels, is less affected.

In this context, the apparent price stability of Brent and WTI may not indicate sufficient global supply but rather reflect temporary buffers created by regional inventory surpluses, benchmark composition, and policies like releasing strategic reserves.

In the short term, there are no signs of an end to the Middle East conflict.

According to CCTV News, Iran’s Army Commander Amir Hatami said on March 18 that Iran will respond “decisively” to the killing of Secretary of the Supreme National Security Council Ali Larijani, “making enemies regret.” Iran’s side stated that Hatami declared Iran will avenge Larijani and other victims, and that “such criminal acts will never hinder Iran’s defense of independence, freedom, territorial integrity, and regime.”

According to data from global commodities monitoring firm Kpler, as of the week ending March 15, the combined oil, condensate, and refined fuel exports from eight Middle Eastern countries—Saudi Arabia, Kuwait, Iran, Iraq, Oman, Qatar, Bahrain, and the UAE—averaged 9.71 million barrels per day, down 61% from 25.13 million barrels per day in February.

Operational oil export routes include Saudi Arabia’s Yanbu port on the Red Sea, Oman’s maritime exports, and the UAE’s Fujeirah port. However, Fujeirah port’s loading operations have been repeatedly disrupted in recent days due to drone attacks.

Fawad Razaqzada, senior strategist at Gain Capital, told reporters that as the Middle East conflict enters its third week, the Strait of Hormuz has become a major focus, and the risk bias for crude oil is upward. The Strait of Hormuz is one of the world’s most critical energy chokepoints, and the scale of supply disruption cannot be ignored. If tanker traffic remains halted for a long time, it could trigger global energy supply concerns and push oil prices higher again.

Even if the Strait of Hormuz reopens, immediate relief is unlikely. According to the International Energy Agency, since the conflict began, about 10 million barrels per day of Middle Eastern production have been shut in, and restoring these volumes could take weeks or even months.