Tehran: Global oil benchmarks climbed steeply at the start of the week after escalating hostilities in the Middle East rattled energy markets and raised fears of supply disruptions across key export routes.
Investors reacted sharply to fresh US and Israeli strikes on Iran and subsequent retaliatory attacks targeting Israel and American military facilities in the Gulf region. The intensifying conflict has heightened concerns that crude shipments from one of the world’s most vital energy corridors could be interrupted.
In early trading on Monday, West Texas Intermediate (WTI), the primary US crude benchmark, jumped more than 7 per cent to hover around $72 per barrel, up from roughly $67 at Friday’s close, according to market data. Brent crude, the international standard, also recorded a similar surge, rising nearly 8 per cent to trade above $78 per barrel after previously touching a multi-month high.
Market participants are increasingly wary about the security of cargo moving through the Strait of Hormuz, a narrow passage linking the Persian Gulf to global markets. The channel handles close to 15 million barrels of crude daily — roughly one-fifth of worldwide supply — making it the most critical oil chokepoint on the planet. Any sustained disruption there could significantly tighten global inventories.
Recent reports of attacks on vessels navigating the strait have added to volatility, reinforcing fears that exports from major producers including Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Iran may be constrained. Energy analysts note that even temporary slowdowns in shipments can quickly translate into price spikes.
Higher crude prices typically ripple through the broader economy. Consumers may soon feel the impact at fuel stations, while transport and manufacturing costs could push up prices of food and other essential goods — a worrying prospect amid already elevated inflation levels in many countries.
In a move aimed at calming markets, eight members of the OPEC+ alliance announced plans to raise output beginning in April. The group, which includes Saudi Arabia, Russia, Iraq, the UAE and others, said it would collectively add over 200,000 barrels per day to global supply. However, analysts caution that additional production may offer limited relief if transport routes remain under threat.
Experts emphasize that access to secure shipping lanes matters more immediately than headline production increases. If tanker traffic through the Gulf slows significantly, spare capacity elsewhere may not quickly offset the shortfall.
Iran, which exports roughly 1.6 million barrels per day — largely to China — could also face interruptions if tensions escalate further. Any disruption to those flows may force buyers to seek alternative sources, potentially placing additional upward pressure on prices.
With geopolitical uncertainty mounting, energy markets are likely to remain volatile in the days ahead, as traders assess whether the conflict will intensify or shift toward de-escalation.
