Global oil prices jumped sharply on Monday after escalating conflict involving Iran, Israel and the United States disrupted shipping through the Middle East, raising fears of a major supply shock in one of the world’s most critical energy corridors.
Brent crude briefly surged by as much as 13% during early trading, reaching $82.37 per barrel its highest level since January 2025 before easing slightly. By 0605 GMT, Brent was still up $5.41, or 7.4%, at $78.28 a barrel.
U.S. West Texas Intermediate (WTI) crude also recorded strong gains, climbing more than 12% to an intraday high of $75.33, the strongest level since June.
Prices later pulled back but remained elevated, trading at $71.76 per barrel, up $4.74, or 7.1%.
The surge followed intensified military exchanges across the region after Israeli and U.S. strikes in Iran which reportedly killed Iranian Supreme Leader Ayatollah Ali Khamenei triggered retaliatory attacks that disrupted maritime activity in the Strait of Hormuz.
The strategic waterway, located between Iran and Oman, connects the Persian Gulf to the Arabian Sea and serves as one of the world’s most important oil transit routes.
On a typical day, vessels carrying roughly one-fifth of global oil consumption pass through the strait, transporting crude from major producers including Saudi Arabia, the United Arab Emirates, Iraq, Iran and Kuwait to key Asian markets such as China and India.
Shipping activity slowed dramatically over the weekend as security risks intensified. Maritime tracking data showed more than 200 vessels including oil and liquefied natural gas tankers anchoring outside the strait amid safety concerns.
At least three tankers were damaged during attacks in Gulf waters on Sunday, and one seafarer was reported killed, further heightening fears of prolonged disruptions to global energy supplies.
Market analysts said traders were reacting to the growing risk of supply interruptions rather than an immediate shortage.
“Markets are acknowledging the seriousness of the conflict, but are also signalling that, for now, this is a geopolitical shock, not a systemic crisis,” said Priyanka Sachdeva, a senior analyst at Phillip Nova.
However, analysts warned that any sustained closure or restriction of the Strait of Hormuz could push prices significantly higher and lead to supply shortages for major import-dependent economies.
Asian governments have already begun assessing emergency measures.
South Korea indicated it could release petroleum reserves to support domestic industries if disruptions continue, while India is exploring alternative shipping routes to secure energy imports.
Despite the sharp rally, oil prices later trimmed gains as traders reassessed risks, with analysts noting that markets had already priced in a geopolitical premium amid rising tensions in recent weeks.
Before the latest escalation, Brent crude had already risen more than 19% this year, while WTI prices were up roughly 17%.
In a move aimed at stabilizing markets, the OPEC+ alliance agreed on Sunday to increase oil production modestly by 206,000 barrels per day beginning in April.
Analysts noted, however, that most producers are already operating near maximum capacity, leaving limited room to offset major supply disruptions.
The International Energy Agency said it is maintaining close contact with major Middle Eastern producers and stands ready to coordinate emergency releases from strategic petroleum reserves if necessary.
Global visible oil inventories currently stand at approximately 7.8 billion barrels equivalent to about 74 days of demand a level analysts describe as close to historical averages.
Citigroup analysts projected Brent crude could trade between $80 and $90 per barrel this week if hostilities continue.
They suggested the conflict could ease within one to two weeks if political changes in Iran or diplomatic intervention lead to de-escalation.
Meanwhile, rising crude prices are beginning to affect fuel markets worldwide.
U.S. gasoline futures climbed as much as 9.1% to $2.496 per gallon, their highest level since July 2024, before settling at $2.381 per gallon, still up 4.2%.
Analysts warned that retail gasoline prices in the United States could exceed $3 per gallon, a development that may carry political consequences ahead of upcoming midterm elections.
As military tensions persist across the Middle East, energy markets remain highly sensitive to further disruptions, with traders closely watching developments around the Strait of Hormuz a choke point whose stability is critical to global economic security.
