Dubai crude oil prices soared to a record $166 a barrel on Thursday, according to market data provider Platts, marking a historic high amid ongoing conflict in the Middle East and the closure of the Strait of Hormuz [1]. Dated Brent and West Texas Intermediate (WTI) Cushing's are trading around $100, with Brent crude prices having surged nearly 50% since the start of the war and currently at approximately $106 [1]. The extreme spike in Dubai and Oman crude prices reflects the severe shortage in the Gulf region, with local markets now seen as a potential precursor for global oil benchmarks if the conflict persists [1]. JPMorgan's head of commodities research, Natasha Kaneva, warned that if the Strait does not reopen, the current price divergence is unlikely to persist, and Brent and WTI will ultimately reprice higher as Atlantic basin inventories are drawn down and the global market faces tighter supply [1]. Andy Harbourne, senior oil markets analyst at Wood Mackenzie, noted that WTI is not an ideal substitute for Middle Eastern crude like Oman, but could become more sought-after if transit through Hormuz remains depressed, as buyers become more desperate [1]. The Strait of Hormuz, a critical passageway for about one-fifth of the world's oil, has seen daily transit calls plummet to nearly zero from highs above 120 earlier this year, according to Charles Schwab data [1]. This disruption has led to faster price increases for crude directly leaving Middle Eastern countries, particularly impacting the Singapore market, while analysts at Rystad are now tracking Dubai's London market price due to the intense disruption in Asia [1]. Susan Bell, senior vice president at Rystad, described the Singapore price as 'almost a fictitious price' given the current market conditions [1].
CONCLUSION
The closure of the Strait of Hormuz has triggered a record surge in Dubai crude prices, with Brent and WTI also climbing sharply. Analysts warn that if the Strait remains closed, global oil benchmarks are likely to reprice higher as supply tightens. The market is closely watching the duration of the closure, with significant implications for oil prices worldwide.