Chapter 1: What is driving oil prices past $100 a barrel?
The Persian Gulf oil shock is here. We'll get the latest as prices top $100 a barrel and attacks on infrastructure escalate.
The growing number of strikes between Iran and all of its neighbors, including Israel and the U.S., have increasingly taken on a new target in this war, which is critical infrastructure.
Plus, what Iran's new supreme leader tells us about the country's eagerness to keep fighting. And President Trump's sons back a new drone company banking on sales to the U.S. military. It's Monday, March 9th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today.
Oil prices have crossed $100 a barrel for the first time since Russia's invasion of Ukraine rattled oil markets in 2022. The journal's Joe Wallace has been tracking the war with Iran's impact on oil markets. He joins us now with the latest.
Chapter 2: How is Iran's conflict affecting global oil markets?
Joe, I guess we can say it now. It has been a history-making week for oil markets. U.S. futures registering their biggest weekly rise ever. We've got Brent and West Texas Intermediate Crude having both spiked today to almost $120 a barrel, though they have settled down a little bit from there.
Just walk us through the movement we're seeing in energy markets and why, as you and your colleagues reported over the weekend, all of this amounts to the Persian Gulf oil squeeze that many people had long been fearing.
I think when the war broke out, there was a degree of complacency in the oil market. The market thought that the closure of the Strait of Hormuz was the boy that cried wolf. This didn't happen last year, even during the 12 day war. And likewise, Iran had mostly in the past refrained from attacking regional energy infrastructure.
By the Sunday after the attack, it was clear that both of those assumptions were out of the window. But even so, it took the market until really Friday to realize the full implications, especially of the closure of the strait, which is that with nowhere for the oil to go, massive producers in the region were going to have to cut production because they don't have enough space to store the oil.
And Kuwait, for example, simply hadn't built much storage space down the years because its oil fields are close to the coastal ports. And the assumption was this oil would just flow out to the market, and that's clearly no longer the case.
You've reported that the straits are not technically closed, but you only need to look at the number of ships in the Gulf waiting to pass through to kind of get a read on effectively what the situation is.
Precisely. The Iranian messaging has been mixed. The Iranian delegation to the United Nations said last week the strait is open, but at the same time, ships in... The region have reported receiving radio messages purportedly from Iranian naval captains saying don't pass through. The IRTC has warned that ships from Europe and Israel and the US are legitimate targets.
And as of Sunday, at least nine ships had been attacked and one sailor had been killed. So you can see why most ship owners don't want to go through right now.
And on top of that, there is a fear, a growing fear, it seems well-founded, that disruptions to infrastructure are going to continue. This is something that our correspondent Thomas Grove has been watching, and he filed this update for us.
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Chapter 3: What are the implications of the Strait of Hormuz situation?
The world uses more natural gas these days. Renewables are a growing share of energy.
And the US is a net energy exporter.
Exactly, which insulates the US. Although that's all to say that this is really a historic shock to oil supply. It would need to go on for some time for the kinds of price rises that we saw in the early 70s and even the late 70s.
I've been speaking to Wall Street Journal reporter Joe Wallace. Joe, thank you so much. Thanks, Luke. Meanwhile, Iran has a new supreme leader. The country's assembly of experts has appointed Moshtaba Khamenei to succeed his late father, Ayatollah Ali Khamenei, an announcement that sparked celebrations on the streets of Tehran.
Security correspondent Benoit Faucon says the lifetime appointment signals Tehran's defiance of President Trump and Israel, which on Saturday said a new supreme leader would be subject to fresh strikes.
The regime is kind of hankering down and closing ranks. The fact they chose the closest replica to the father, which is the son, is significant in the idea that they basically... don't want to change anything.
So all the possible options that always existed in the regime, either obviously a more conciliatory stance to the West, especially in the nuclear program, political opening, economic opening, that's unlikely to happen. He's a very conservative clerical figure. His connections are more with the clerical nationalist group, which is very much in support of supporting insurgencies in the Middle East.
very conservative religious views in the country. So what he says is a hard line stands going forward, no concession.
And while the appointment provides continuity for the regime for now, Benoit said its longer-term prospects are uncertain.
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