Oil prices surge as Middle East chaos widens

Crude oil prices continued to surge on Friday, as the crisis in the Middle East deepens.

Benchmark crude West Texas Intermediate was trading at its highest level since April 24 last year at $85.05, gaining more than 8% on the day and up about 26% for the week. Similarly, Brent rose 5.5% on a daily basis to trade at $87.80.

Earlier in the day, the Financial Times reported that Qatar’s Energy Minister Saad al-Kaabi warned that the ongoing war in the Middle East, which involves the US, Israel and Iran, could drive ‌oil prices to $150 a barrel.

Kaabi added that even if the ​war ended immediately it would take ​Qatar “weeks to months” to return to a normal cycle ‌of ⁠deliveries.

Meanwhile, US Energy Secretary Chris Wright told Fox News that the US navy will escort ships as soon as reasonable and argued that they should see oil prices come down in weeks, rather than months. These comments, however, failed to trigger a correction in oil prices.

Commenting on rising oil prices, Federal Reserve Governor Christopher Waller said that people will see a spike in gas prices, but added that this situation is unlikely to cause sustained inflation.

“If energy prices are unwound in a few weeks or a couple of months it will cause a problem for the Fed,” Waller added and said it could have a broader impact if it were to last longer.

Following a Senate vote on Wednesday, the US House has rejected a measure to limit US President Donald Trump’s ability to take further military action against Iran on Thursday.

Meanwhile, President Trump said that Iranian officials reached out in an attempt to come to an agreement to end the war, but he insisted that it was too late.

In response, Iranian Foreign Minister Abbas Araghchi told “NBC Nightly News” anchor Tom Llamas that Iran has not asked for a ceasefire and added that they have rejected negotiations with the US.

(Source: OANDA)