Global oil markets jolted on Monday as escalating strikes in the Middle East fuelled fears of supply disruptions. Brent crude, the international benchmark, rose more than 10% to over $82 a barrel following attacks on several vessels near the Strait of Hormuz. Natural gas prices surged by up to 25%.
The unrest stems from ongoing Iranian retaliatory strikes against locations in the region targeted by recent US and Israeli operations. Iran has warned vessels to avoid passing through the Strait of Hormuz, a critical shipping route for about one-fifth of the world’s oil and gas exports.
In London, the FTSE 100 opened nearly 1% lower, weighed down by airline stocks after Middle Eastern airspace closures disrupted flights. Across Europe, the CAC-40 in France fell 1.6%, while Germany’s DAX dropped 1.7%. Investors turned to safe-haven assets, sending gold prices up 2.3% to $5,395.99 an ounce.
Shipping in the Gulf has nearly halted. Analysts warned that prolonged conflict could drive energy prices even higher. The UK Maritime Trade Operations Centre (UKMTO) reported two vessels struck by projectiles, with a third narrowly missed. At least 150 tankers remain anchored in the Gulf, avoiding the strait amid heightened insurance costs.
“Because of Iran’s threats, the strait is effectively closed,” said Homayoun Falakshahi from ship-tracking platform Kpler. “Vessels are taking precautionary measures. If the strait stays shut for long, prices could go much, much higher.”
After the initial surge, Brent crude fell back to $79 a barrel, while US-traded oil rose about 7.6% to $72.20.
“The market isn’t panicking,” said Saul Kavonic, head of energy research at MST Marquee.
“There is clarity that, so far, oil transport and production infrastructure hasn’t been a primary target. Traders are watching for signs that traffic through the Strait of Hormuz resumes, which would ease prices.”
Some experts, however, warned that prolonged instability could push oil above $100 per barrel, affecting inflation and interest rates globally. Robin Mills, chief executive of Dubai-based Qamar Energy and former Shell executive, said: “The jump in prices will feed through almost immediately because traders are following the news closely. Prices are not extraordinarily high yet, we are not in a full-blown oil crisis.”
Opec+ agreed on Sunday to increase output by 206,000 barrels a day to cushion potential price rises, though analysts doubt this will fully stabilise markets.
Edmund King, president of the AA, noted the global impact: “The turmoil and bombing across the Middle East will disrupt oil distribution worldwide, inevitably leading to price hikes. How much and for how long depends on the duration of the conflict.”
Economists are also monitoring broader economic implications. Subitha Subramaniam, chief economist at Sarasin & Partners, said sustained high oil prices would ripple through food, industrial commodities, and other essentials, driving inflation higher. In the UK, where inflation has been easing, the Bank of England may choose to hold interest rates at 3.75% despite previously signalling possible cuts.
Iran’s Islamic Revolutionary Guards Corps reported that three tankers from the UK and US had been struck and were burning, though neither Western government has commented. The UKMTO noted multiple security incidents across the Arabian Gulf and Gulf of Oman, advising vessels to transit with caution.
Major shipping companies are taking action. Danish container group Maersk announced it would pause sailings through the Bab el-Mandeb Strait and Suez Canal, rerouting ships around the Cape of Good Hope.
The situation remains volatile. With energy markets and global supply chains on edge, traders, governments, and consumers are bracing for further price shocks should the conflict deepen.
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