Crude oil prices experienced a dramatic surge in Asian markets on Monday, triggered by escalating tensions in the Middle East following coordinated military strikes by the United States and Israel targeting Iran. Brent crude futures, the global benchmark for oil, surged by approximately 13%, climbing above $82 per barrel shortly after trading opened. Similarly, the US benchmark, West Texas Intermediate (WTI), witnessed a near 10% increase, pushing prices beyond the $70 per barrel mark. This sharp rise marks a significant jump from Friday’s closing figures, where Brent settled around $72.
The upward momentum in oil prices had already begun last week as geopolitical anxieties mounted ahead of the weekend’s military actions. The recent strikes have intensified regional instability, particularly threatening maritime routes crucial for global energy supplies. The Strait of Hormuz, a narrow but vital waterway through which nearly one-fifth of the world’s oil shipments pass, has become a focal point of concern. Although the strait remains partially navigable, with some Chinese and Iranian vessels reportedly transiting the area, the overall flow of maritime traffic has been severely disrupted.
In response to the heightened risks, major shipping companies have announced suspensions of their fleets’ passage through the Strait of Hormuz. This disruption has led to a sharp increase in insurance premiums for vessels operating in the region, making transportation costs prohibitively expensive. Amena Bakr, who leads Middle East and OPEC+ research at the energy analytics firm Kpler, warned that these developments could push oil prices even higher, potentially reaching the $90 per barrel threshold if the situation persists.
Experts emphasize that while alternative routes and infrastructure exist, they are insufficient to fully compensate for the potential closure of the Strait of Hormuz. Jorge Leon, an analyst at Rystad Energy, highlighted that a blockade could result in a loss of between 8 million to 10 million barrels per day of crude oil supply, a significant shortfall that would strain global markets. Although many oil-importing nations maintain strategic reserves—OECD countries are mandated to hold stocks covering approximately 90 days of consumption—the scale of the disruption could overwhelm these buffers. Bakr pointed out that even with spare capacity in these reserves, the gap created by a prolonged closure would be too vast to fill effectively.
Adding a political dimension to the crisis, Michelle Brouhard, another analyst at Kpler, described the spike in oil prices as a potential vulnerability for then-US President Donald Trump. She suggested that Iran might be leveraging high crude prices as a strategic tool to pressure the US administration, especially with mid-term elections looming later this year. Trump’s campaign had promised voters lower fuel costs, making the surge in oil prices a politically sensitive issue that could influence public opinion.
Alongside crude oil, natural gas prices are also expected to climb sharply, particularly given Qatar’s role as a major exporter of liquefied natural gas (LNG). This increase in energy costs raises concerns about inflationary pressures worldwide. The last time oil prices soared above $100 per barrel was at the onset of the Ukraine conflict, a period that also saw gas prices spike dramatically. This combination contributed to a sustained rise in consumer prices globally.
Economists warn that the ripple effects of soaring energy prices could dampen economic growth. Eric Dor, an economist at the IESEG School of Management in Paris, noted that rising fuel costs, increased shipping expenses, and reduced revenues for air transport sectors could collectively exert a “harmful effect” on economic expansion. He cautioned that while a short-term disruption lasting a few days might be manageable, a prolonged crisis could deepen recessionary pressures, further complicating recovery efforts in an already fragile global economy.
