Global markets reacted sharply on Monday following escalating conflict in the Middle East after US and Israeli strikes on Iran, including the killing of Supreme Leader Ayatollah Ali Khamenei. The crisis prompted a spike in oil prices, fears of a Strait of Hormuz shutdown, and turbulence across Asian stock markets.
Oil Prices Surge Amid Strait of Hormuz Disruptions
Brent Crude surged to over $80 per barrel in early Asian trade, up from Friday’s close of $72.87, before easing slightly below $79. The Strait of Hormuz, a critical passage for approximately 20 percent of global seaborne oil, has effectively been closed amid attacks on multiple vessels.
Iran’s Revolutionary Guards warned against transit, while at least two ships were struck one off Oman and another near the UAE according to the British maritime security agency UKMTO. An Iranian state media report said an oil tanker was sinking after attempting to navigate the strait.
Market analysts are warning of further price spikes. Amena Bakr, head of Middle East and OPEC+ research at Kpler, predicts oil could hit $90 per barrel, citing prohibitive insurance costs and potential supply gaps. Jorge Leon of Rystad Energy noted that the effective closure of the strait could remove 8–10 million barrels per day from the global supply chain.
US-Iran Tensions and Political Implications
US President Donald Trump called on Iranians to rise against their government and warned that the conflict could last “four weeks.” Analysts suggest that Tehran may use elevated oil prices as leverage, calling it the “Achilles heel of Trump,” particularly with US midterm elections approaching.
Market Reactions
Asian stocks opened sharply lower, reflecting investor concerns over energy prices and regional instability. Japan’s Nikkei fell 2.2 percent, while the S&P/ASX 200 in Sydney dropped 0.5 percent. Meanwhile, gold viewed as a safe-haven asset rose 2 percent.
Rising energy costs are expected to extend beyond crude oil. Qatar, a major exporter of liquefied natural gas, could see further price surges, contributing to inflationary pressures worldwide. Economist Eric Dor warned that prolonged disruptions could have a “recessionary effect,” impacting sectors such as air transport, maritime shipping, and tourism.
Outlook
The immediate impact of Middle East instability underscores the fragility of global energy supply chains and the interconnectedness of geopolitics and markets. If the Strait of Hormuz remains blocked for an extended period, analysts predict sustained high oil and gas prices, rising transportation costs, and increased volatility across financial markets.
The world watches closely as the conflict continues to unfold, with implications for energy security, global trade, and economic growth in the coming weeks.
