The price of Brent crude rose by more than 3% to above $115 per barrel, while US-traded oil climbed to $101.62 after gaining nearly 2%, putting Brent on track for its biggest monthly gain on record.
Asian markets reacted sharply to the escalating conflict, with Japan’s Nikkei 225 falling 2.8% and South Korea’s Kospi closing almost 3% lower.
The surge in oil prices follows a widening of the conflict, after Iran-backed Houthi rebels in Yemen joined the war by launching strikes on Israel over the weekend. Iran also threatened to expand retaliatory attacks, including targeting universities and the homes of US and Israeli officials.
US President Donald Trump said in an interview that he could “take the oil in Iran” and possibly seize Kharg Island, the country’s main fuel export terminal.
When asked about Iran’s defences on the island, he said: “I don’t think they have any defence. We could take it very easily.”
Trump compared the potential move to Venezuela, where the United States plans to control the oil industry “indefinitely” following the seizure in January of then-President Nicolás Maduro.
Over the weekend, Iran’s parliament speaker warned that the country’s forces were “waiting for American soldiers” as an additional 3,500 US troops arrived in the Middle East.
Global energy markets have remained volatile after Tehran threatened to attack vessels attempting to cross the Strait of Hormuz, through which around a fifth of the world’s oil and gas supply usually passes. The flow through the route has largely come to a standstill, driving prices higher.
Shipping expert Lars Jensen warned that even if the Strait of Hormuz were to reopen immediately, further price increases are likely, noting that oil loaded before the crisis is only now reaching refineries.
He said the impact of the conflict could be “substantially larger” than the oil crisis of the 1970s, which triggered widespread economic disruption.
Jensen also warned of the effect on food prices, noting that 20% to 30% of globally traded fertiliser originates from the Gulf, meaning disruptions could lead to rapidly rising costs, particularly in poorer countries.
Judith McKenzie said the full impact of the war has yet to filter through to consumers, stressing that oil shocks do not show up instantly but could still drive inflation.
Energy markets expert Sean Foley said oil prices are likely to rise further unless tensions ease, warning that Houthi attacks could also disrupt shipments through the Bab al-Mandeb Strait near Yemen.
A blockade of that route could affect a further 10% of global oil supply, placing additional strain on already fragile supply chains.
Andrew Lipow warned that Brent crude could reach $130 per barrel in the coming weeks, adding that rising energy and food costs could slow global economic activity as consumers struggle with higher expenses.
Erizia Rubyjeana
Follow us on:
