Oil prices surged nearly 10% on Monday, while the U.S. Dollar jumped to its highest level in over five weeks as escalating conflict in the Middle East fueled investor flight to safe-haven assets and raised concerns about potential disruptions to global energy supplies. Brent crude climbed to $79.90 a barrel, briefly touching $82, and U.S. Crude rose 8.2% to $72.64, according to market reports.
The price increases followed reports of intensified military confrontations in the region, including Iranian state media claims of a new wave of missile launches targeting what they described as “enemy sites.” These developments coincided with statements from former U.S. President Donald Trump suggesting potential strikes on Iran could extend for up to four weeks, further amplifying geopolitical risk.
Gold, another traditional safe haven, also experienced a significant increase, rising 2.6% to $5413 per ounce. Equity markets globally responded negatively to the heightened tensions, with broad-based declines reported across major indices.
Focus is increasingly centered on the Strait of Hormuz, a critical waterway for global oil trade, through which approximately 20% of the world’s natural gas and 5% of its oil pass daily. While the strait remains officially open, data tracking ship movements indicates a build-up of oil tankers on either side, reflecting anxieties over potential attacks or difficulties securing shipments.
The International Energy Agency (IEA) has stated it is closely monitoring the situation in the Middle East and its potential impact on oil markets. Bank of Barclays has raised its forecast for Brent crude futures to $100 per barrel, signaling expectations of continued price increases. Eurasia Group has warned of a rapid ascent to $100 per barrel as a distinct possibility.
The developments are occurring as markets reassess geopolitical risks, threatening to undermine the global economic recovery and reignite inflationary pressures. The situation remains fluid, with no immediate diplomatic resolution apparent.
