Global oil prices continued their upward trajectory on Monday after fresh attacks in the Gulf heightened fears of supply interruptions. These developments exacerbated existing concerns fueled by geopolitical tensions, rising bond yields, and risks to shipping through the strategic Strait of Hormuz.
Brent crude futures increased by approximately 1.2 percent, reaching around $110.7 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose between 1.0 and 1.8 percent, trading near $106 to $107 per barrel. The United Arab Emirates’ Murban crude experienced the most significant gain among major benchmarks, surging about 3.3 percent to roughly $108 per barrel.
The recent price rally followed a drone strike that ignited a fire at a nuclear power plant in the UAE. Simultaneously, Saudi Arabia announced it had intercepted three drones targeting its territory. These incidents revived worries about instability in the Gulf, a vital region for global energy supplies.
In a significant development, U.S. President Donald Trump urged Iran to swiftly reach an agreement, adding to market unease over escalating Middle Eastern tensions. The Strait of Hormuz remains a focal point of concern, as it serves as a crucial maritime route for nearly one-fifth of the world’s oil trade. Disruptions in this passage have already sparked fears of tighter supply and increased transportation costs for crude exports.
Analysts highlighted that growing uncertainty surrounding supply routes, combined with expectations of stronger global demand, continues to underpin oil prices. Capital Economics noted that the ongoing closure is rapidly depleting global oil inventories, warning that stocks could reach critical lows by the end of June. This scenario might push Brent crude prices to a range between $130 and $140 per barrel if disruptions worsen.
They further cautioned that a prolonged closure of the Strait of Hormuz through year-end, coupled with sustained oil prices near $150 per barrel into 2027, could drive inflation in major economies like the UK and the eurozone close to 10 percent. Such inflationary pressures would elevate the risk of a global recession.
The surge in oil prices has also influenced broader financial markets. U.S. Treasury yields climbed sharply, with the 10-year benchmark yield rising to 4.584 percent after a 23 basis point increase last week, while the 30-year yield stood at 5.109 percent. Asian stock markets weakened as investors sought safer assets; Japan’s Nikkei index declined by about 0.4 percent, and South Korean shares dropped over 2 percent following a loss of momentum in semiconductor stocks. MSCI’s broad index of Asia-Pacific shares excluding Japan fell 0.6 percent.
In currency markets, the U.S. dollar strengthened due to safe-haven demand. The euro hovered near $1.1620 after a weekly decline of 1.4 percent, and the British pound traded around $1.3318 amid political uncertainty and rising bond yields. Gold prices remained relatively stable at approximately $4,540 an ounce despite the geopolitical tensions.
Investors are closely monitoring the upcoming G7 finance ministers’ meeting in Paris, where discussions are expected to address the Strait of Hormuz, global supply chain challenges, and the economic impact of escalating geopolitical risks. Later this week, market focus will shift to corporate earnings, especially from leading technology and retail firms, to assess whether higher energy costs are beginning to dampen consumer demand and business confidence worldwide.
In Pakistan, the recent rise in global crude prices may increase pressure on domestic fuel costs. This comes shortly after the government implemented a modest reduction in petrol and diesel prices. Analysts suggest that continued upward trends in international oil markets could compel Islamabad to raise petroleum product prices again in the near future.
