Oil prices climbed above USD 100 per barrel again this week despite a coordinated decision by more than 30 countries to release emergency oil reserves, highlighting growing fears that the expanding war in the Middle East could disrupt global energy supplies for an extended period.
Global energy markets reacted sharply as the war involving the United States, Israel and Iran continued to escalate. Brent crude rose back above USD 100 a barrel on Thursday after volatile trading earlier in the week, when prices briefly surged to as high as USD 108 before easing.
The increase came even after major economies, including the United States, pledged on Wednesday to release a combined 400 million barrels of oil from strategic reserves in an effort to stabilise markets and limit further price increases.
Much of the uncertainty is centred on the Strait of Hormuz, the narrow waterway between Iran and Oman through which roughly one-fifth of the world’s oil supply is transported. Iranian officials have warned that oil shipments benefiting the United States and its allies would not be allowed to pass through the strait.
Security conditions around the waterway have deteriorated in recent weeks. Several merchant vessels have reportedly been attacked in and around the strait since U.S. and Israeli strikes on Iran began last month. Three ships in the Persian Gulf were struck by unknown projectiles, according to the United Kingdom Maritime Trade Operations, including one vessel near Dubai and two off the coast of Iraq.
The attacks and rising security risks have already begun to affect energy infrastructure in the region. Oil export terminals in Oman and Iraq were temporarily closed due to security concerns, adding to fears of supply disruptions.
Military activity across the region has also intensified. Airstrikes were reported in Beirut and Tehran during the week, while several Gulf states said they intercepted attacks originating from Iran. Saudi Arabia said it destroyed two drones heading toward the Shaybah oil field, one of the kingdom’s major energy installations. In northern Iraq, a missile struck an Italian military base in Erbil, though no casualties were reported.
The war has also expanded in Lebanon, where heavy Israeli airstrikes have struck areas in and around Beirut. Lebanese officials say hundreds of people have been killed and hundreds of thousands displaced in recent days as fighting between Israel and Hezbollah escalated.
These developments have reinforced fears of a prolonged disruption to energy flows from the Middle East. The region remains central to global oil production, and any sustained impact on shipping routes or production facilities could prolong volatility in energy markets.
Earlier in the week, crude benchmarks surged after reports of production disruptions and precautionary output reductions among several Middle Eastern producers. Output from major southern oilfields in Iraq has reportedly declined, while Kuwait has reduced production at some fields and refineries. Qatar has also scaled back liquefied natural gas output.
The conflict has also affected refined fuel markets across Asia. The Singapore Gasoil 10ppm benchmark, which serves as a pricing reference for diesel imports across the region including the Maldives, climbed to around USD 143.80 per barrel as traders priced in supply risks and higher shipping costs.
For the Maldives, where electricity generation, marine transport and a large part of the fisheries sector rely on imported diesel, sustained increases in global fuel prices could quickly translate into higher operating costs across multiple sectors.
Power utilities such as STELCO and FENAKA depend largely on diesel-based generation across the islands. Inter-island transport services, fishing vessels and construction operations are also heavily reliant on petroleum products.
Any prolonged disruption to tanker traffic through the Strait of Hormuz could tighten supply to Asian markets and place further upward pressure on diesel prices and shipping costs.
While global inventories and strategic reserves may cushion short-term supply shocks, the trajectory of the war and its impact on energy infrastructure will continue to shape global fuel prices in the coming weeks.
For small island economies such as the Maldives, where imported fuel remains central to electricity generation and transportation, movements in oil and diesel prices will remain a key economic concern.
