DUBAI, July 20 — Oil prices surged 5% today after an attack on a tanker and sustained US strikes in the region pushed the global oil market into fresh turmoil. Brent crude traded above $90 a barrel as markets priced in the heightened risk to supply through the Strait of Hormuz, a narrow chokepoint that carries about a fifth of the world’s petroleum. War risk insurance premiums for vessels transiting the Strait of Hormuz soared to 1% of hull value, up from 0.05% in normal times.
For a tanker worth $50 million, that adds $150,000 per voyage — a cost that will flow through the global supply chain. Shipping rates for Very Large Crude Carriers (VLCCs) jumped 30% on the day, raising the cost of moving oil to refineries across Asia, including in the Philippines, Japan, and India.
Industries that rely heavily on oil, such as airlines and shipping lines, face immediate cost increases. For families across the region that depend on affordable air travel and imported goods, this escalation means higher prices could be coming soon.
Global Markets React
Stock markets worldwide fell on the news. The S&P 500 dropped 1.2% in a single day, reflecting investor anxiety over higher energy costs and their drag on economic growth. The US administration, under President Donald Trump, has not yet announced a policy response, but past precedents offer a guide.
The US Strategic Petroleum Reserve held about 363 million barrels as of early 2024, and it could be tapped to stabilise markets — similar to the 50 million barrel release in November 2021. The International Energy Agency stated it stands ready to coordinate an emergency oil release if needed.
That would bring together consumer nations in a collective effort to cool prices and protect the global economic recovery that has been fragile in many parts of Asia, including the Philippines.
Historical Precedent and Outlook
Previous incidents offer a measure of the risk. The 2019 attacks on Saudi oil facilities caused a 15% spike in oil prices within two weeks. The current escalation, if prolonged, could push oil above $100 per barrel and threaten the global economic recovery, according to analysts.
For communities across Southeast Asia, where fuel subsidies are strained and transportation costs eat into household budgets, the stakes are immediate and direct. Closer to home, the Philippines and other net oil-importing nations in Asia are among the most vulnerable.
Every dollar rise in oil prices widens trade deficits, weakens currencies, and pushes up the cost of electricity, transport, and food. The coming days will reveal whether diplomatic channels or emergency reserves can prevent a deeper crisis.
