Crude oil prices surged in early Monday trading as investors weighed the potential impact of escalating Middle East tensions on energy supplies. The price of US benchmark West Texas Intermediate crude rose roughly 8 percent to $72.41 per barrel by 09:53 CET, while Brent crude climbed 8.48 percent to $79.05 a barrel.
The spike came after coordinated US and Israeli attacks on Iranian targets prompted swift retaliation from Tehran, which targeted assets across multiple countries in the region. Traders are concerned that these strikes could disrupt oil exports from Iran and other Gulf producers. Two vessels transiting the Strait of Hormuz, a critical chokepoint for global energy flows, were reportedly attacked, further restricting exports.
“Roughly one-fifth of global oil and LNG flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system,” said Stephen Innes of SPI Asset Management. Analysts warned that any prolonged disruption to energy shipments from the region would raise costs for fuels worldwide and ripple through the global economy.
RaboResearch Global Economics & Markets noted that interruptions in oil and LNG shipments would have “huge implications… Energy is an input to all production.” Iran currently exports around 1.6 million barrels of oil daily, primarily to China. Any reduction in supply could force Beijing to seek alternatives, pushing energy prices higher. Analysts said China could mitigate the shortfall using its strategic reserves of 1.5 billion barrels or by increasing imports from Russia, according to Michael Langham of Aberdeen Investments.
The attacks were partially anticipated following a significant US military build-up in the region, prompting traders to adjust positions ahead of time. Even so, the immediate market reaction reflected the risks of further escalation.
Safe-haven assets also saw sharp movements. Gold prices rose 2.4 percent to roughly $5,371 per ounce as investors sought security amid geopolitical uncertainty.
Equity markets in Asia and beyond reacted negatively to the unrest. Japan’s Nikkei 225 opened more than 2 percent lower, while Hong Kong’s Hang Seng fell 1.6 percent to 26,215.91. The Shanghai Composite remained largely flat at 4,163.01. Taiwan’s benchmark index declined 0.6 percent, Singapore’s Straits Times dropped 1.9 percent, and Bangkok’s SET fell 2.1 percent. Australia’s S&P/ASX 200 also slipped 0.3 percent to 9,173.50. Futures for US indices, including the S&P 500 and Dow Jones Industrial Average, were down about 0.8 percent by mid-morning in Bangkok.
The market turbulence highlights the interconnectedness of energy, commodities, and global equity markets, with investors closely monitoring developments in the Gulf for signals on how long supply disruptions may last and how they could affect energy prices worldwide.
