Oil Prices Jump as Middle East Conflict Shakes Global Markets

Global markets came under pressure on Monday as oil prices surged and equities declined amid fears that escalating conflict in the Middle East could drag on for weeks and disrupt the fragile global economic recovery, Reuters reports.

Benchmark Brent crude climbed 6.4% to $77.57 a barrel after briefly rising above $82 earlier in the session. U.S. West Texas Intermediate crude increased 6.2% to $71.17 per barrel, while Gold rose 1.6% to $5,360 an ounce as investors sought safe-haven assets.

The surge followed continued military strikes by the United States and Israel on Iran, alongside Iranian missile attacks across the region that raised concerns the conflict could draw in neighbouring states. Donald Trump indicated the fighting could continue for another four weeks and said attacks would persist until Washington’s objectives were achieved.

Strait of Hormuz in focus

Market attention quickly shifted to the Strait of Hormuz, a key global energy route through which about one-fifth of the world’s seaborne oil and around 20% of liquefied natural gas shipments pass.

Although the passage has not been closed, shipping data showed oil tankers gathering on both sides of the strait as operators weighed the risks of attack or struggled to secure insurance for voyages through the area.

Analysts warned that any disruption could sharply push up prices. Jorge Leon, head of geopolitical analysis at Rystad Energy, said the halt in traffic through the strait was preventing roughly 15 mln barrels of crude per day from reaching markets.

«Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil,» he said.

A prolonged surge in energy costs could revive inflation pressures worldwide and weigh on consumer spending and business activity.

Markets fall across Asia, Europe and the U.S.

Energy concerns rippled through financial markets. In Japan, the Nikkei 225 fell 1.3%, with airline shares among the worst performers as higher fuel prices threatened to raise costs.

Chinese blue-chip stocks slipped just 0.1%, while MSCI Asia-Pacific ex-Japan Index dropped 1.2%.

Stock markets in United Arab Emirates and Kuwait were temporarily closed, citing exceptional circumstances linked to the regional tensions.

In Europe, futures for the EURO STOXX 50 declined 1.3%, DAX futures slid 1.4% and FTSE 100 futures dropped 0.6%.

On Wall Street, futures tied to the S&P 500 and Nasdaq Composite both fell about 0.8%.

Currency and bond markets react

The spike in oil prices also influenced currency markets, with the U.S. dollar strengthening as investors moved into assets considered safer during periods of geopolitical tension.

The euro slipped 0.2% to $1.1787, while the dollar gained 0.3% against the Japanese yen.

In bond markets, yields on the U.S. 10-year Treasury steadied at 3.97% after briefly touching an 11-month low earlier.

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