The US-Israel war on Iran and Tehran's retaliatory attacks across the Gulf region have upended the world's energy and transport sectors, virtually halting activity in the Strait of Hormuz.

The international benchmark oil contract, Brent North Sea crude, surged to US$92.69 per barrel, up 8.5 percent for the day and nearly 30 percent for the week after US President Donald Trump said only the "unconditional surrender" of Iran would end the Middle East war.

Maritime traffic has all but dried up through the Strait of Hormuz, through which a fifth of the world's crude oil and liquefied natural gas supplies run.

Market reaction to the conflict had been tempered by hopes that it would be short, but Trump's demand for Iran's capitulation increases the prospect of a long conflict. Trump's comments "dashed hopes that the conflict will be averted quickly, and the oil price has continued its push" higher, said XTB research director Kathleen Brooks.

"The longer that key energy infrastructure and shipping routes in the region are affected, the greater the chance of a significant inflationary impact," said AJ Bell investment director Russ Mould.

Attacks on oilfields were reported in southern Iraq and in the northern autonomous Kurdistan region, which forced a US-run oil field to shut production. Kuwait has also begun cutting production due to a lack of petroleum storage capacity, the Wall Street Journal reported.

Earlier this week, Trump pledged to protect ships through the Strait of Hormuz, but shipping companies have exercised caution in the region.

Trump's pledge helped "reduce some of the risk premium in oil markets," but will have "limited impact unless Iran's extensive disruption capabilities are first neutralized," said a note from analysts at JPMorgan Chase. (AFP)



Edited by Robert Kemp