Global oil markets reacted sharply on Monday as Iran continued retaliatory attacks across the Middle East following ongoing strikes by US and Israeli forces. Brent crude, the international benchmark, jumped 10% to over $82 a barrel after at least three vessels were targeted near the Strait of Hormuz over the weekend. US-traded oil rose around 7.6% to $72.20 a barrel. Natural gas prices also spiked, climbing as much as 25% amid heightened regional tensions.
Iran warned ships to avoid the crucial waterway, which carries about 20% of the world’s oil and gas exports. International shipping near the strait has slowed to a near standstill. The UK Maritime Trade Operations Centre reported that two vessels were struck and an unknown projectile exploded close to a third, prompting warnings for ships to “transit with caution.” At least 150 tankers have anchored in Gulf waters to avoid the risk, while a limited number of Iranian and Chinese vessels continued through the strait.
London’s FTSE 100 opened nearly 1% lower, reflecting concerns over the conflict’s impact on regional airspace. Shares in airlines fell sharply after airspace closures across the Middle East. European markets also fell, with France’s CAC-40 down 1.6% and Germany’s DAX sliding 1.7%. Gold, a traditional safe-haven asset, rose 2.3% to $5,395.99 an ounce as investors sought stability amid uncertainty.
Analysts warned that a prolonged conflict could push energy prices even higher. Saul Kavonic, head of energy research at MST Marquee, said the market was not panicking yet, noting that production and transport infrastructure had so far not been targeted directly. “The market will be watching for signs that traffic through the Strait of Hormuz returns, which would see oil prices subside again,” he said.
Robin Mills, CEO of Dubai-based consultancy Qamar Energy, added that while the price jump will impact traders immediately, it is not yet comparable to peaks seen during previous oil crises. The Opec+ group agreed on Sunday to increase output by 206,000 barrels per day to cushion prices, though experts remain skeptical about the effect.
UK authorities warned that disruptions could translate into higher petrol prices worldwide. Edmund King, president of the AA, said the scale and duration of price rises would depend on the length of the conflict. Subitha Subramaniam, chief economist at Sarasin & Partners, noted that sustained high oil prices could ripple across other sectors, including food and industrial commodities, feeding into broader inflationary pressures.
Maersk, the Danish container shipping group, announced it would pause sailings through the Bab el-Mandeb Strait and the Suez Canal, rerouting vessels around the Cape of Good Hope. Homayoun Falakshahi from ship-tracking platform Kpler said the strait was “effectively closed” as insurers and operators assess the heightened risks. Analysts warn that if shipping routes remain blocked, oil prices could rise well above current levels, potentially exceeding $100 a barrel.
