Global oil prices jumped sharply Monday as the ongoing war with Iran raised fears about energy production and shipping routes in the Middle East, sending shockwaves through financial markets before prices later eased.
Brent crude, the global benchmark for oil, climbed to nearly $119.50 per barrel earlier in the day before retreating and trading closer to $105 per barrel.
West Texas Intermediate, the main U.S. oil benchmark, also surged, briefly reaching $119.48 per barrel before slipping back to around $102.
Meanwhile, the conflict continued to impact civilian infrastructure. Bahrain accused Iran of targeting a desalination facility that provides essential drinking water supplies.
Following an Iranian strike that ignited a major fire at one of its refineries, Bahrain’s national oil company declared force majeure on its shipments, invoking a legal clause that frees it from contractual obligations due to extraordinary circumstances.
In Tehran, oil storage sites were left burning after overnight Israeli strikes hit the area.
Energy markets have been increasingly rattled as the war, now entering its second week, spreads to regions and infrastructure central to the production and transport of oil and natural gas from the Persian Gulf.
Prices later eased somewhat after The Financial Times reported that several members of the Group of Seven industrialized nations were considering releasing oil from their strategic reserves to calm the markets. The report, which cited unnamed sources familiar with the discussions, has not been officially confirmed.
President Donald Trump addressed the issue Saturday and appeared to dismiss the need to tap into the United States’ Strategic Petroleum Reserve, saying domestic supplies remain sufficient and predicting that prices will decline soon.
The Strait of Hormuz, one of the world’s most critical oil shipping routes, normally sees about 15 million barrels of crude pass through daily — roughly 20 percent of global supply — according to research firm Rystad Energy.
However, the growing threat of Iranian missile and drone strikes has effectively halted tanker traffic carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran through the narrow passage, which lies along Iran’s northern coastline.
With exports slowed dramatically, Iraq, Kuwait and the UAE have begun cutting production as storage facilities fill up. At the same time, oil and gas infrastructure has been struck in attacks carried out by Iran, Israel and the United States since the war began, further tightening supply.
The sharp rise in oil and natural gas costs is already pushing fuel prices upward worldwide, with ripple effects spreading through industries and hitting Asian economies particularly hard because of their dependence on Middle Eastern energy imports.
Iran itself exports about 1.6 million barrels of oil each day, much of it destined for China. Beijing has urged an immediate halt to the fighting, and disruptions to Iranian exports could force China to secure alternative supplies, which could push energy prices even higher.
“All parties have their responsibility to ensure stable and smooth energy supplies,” Chinese Foreign Ministry spokesman Guo Jiakun said in a briefing Monday. “China will take necessary measures to safeguard its own energy security.”
South Korean President Lee Jae Myung also addressed the crisis Monday, warning that authorities would strictly punish oil refiners and gas station operators found hoarding supplies or manipulating prices. He also urged the country to explore alternative sources of energy that do not rely on shipments through the Strait of Hormuz.
Across Southeast Asia, motorists have already begun feeling the effects of the price spike, with long lines forming at fuel stations.
“Higher oil and gas prices will affect everyone and our economy,” said Le Van Tu, who was waiting outside a gas station in the Vietnamese capital Hanoi. “All activities, including those using petrol based transportation will be affected.”
The last time oil prices reached similar levels was in 2022, following Russia’s invasion of Ukraine, when Brent crude and U.S. oil futures climbed sharply.
Rising energy prices tend to push inflation higher, increasing costs for households and reducing consumer spending — a key driver of economic growth in many countries. These concerns have already spilled into financial markets, sending stock prices sharply lower.
In the United States, the average cost of a gallon of regular gasoline climbed to $3.48 early Monday, nearly 50 cents higher than a week earlier, according to data from AAA. Diesel prices also jumped, rising more than 80 cents over the past week to about $4.66 per gallon.
Some analysts warn that if oil prices remain above $100 per barrel for an extended period, the global economy may struggle to absorb the impact.
Natural gas prices in the United States have also risen during the conflict, though not as dramatically as oil. Early Monday, natural gas was trading at about $3.34 per 1,000 cubic feet, compared with $3.19 at Friday’s close.
{Matzav.com}
