DUBAI/RIYADH: Oil prices surged Monday while global equities fell and investors rushed into traditional safe havens, as escalating military conflict in the Middle East threatened to disrupt energy supplies and prolong market volatility, WNN reports.
Brent crude leapt 9% to $79.42 a barrel, and U.S. West Texas Intermediate climbed 8.6% to $72.61. Gold rose 1.4% to $5,350 an ounce as investors sought protection from geopolitical risk.
Military strikes by the United States and Israel on Iran showed no signs of easing, with Iran launching missile barrages across the region in response. The escalation has raised fears of a prolonged conflict that could draw neighboring countries into the crisis. President Donald Trump told the Daily Mail the fighting could last another four weeks, adding that operations would continue until U.S. objectives were achieved.
Markets are closely monitoring the Strait of Hormuz, a critical chokepoint through which roughly 20% of global seaborne oil and liquefied natural gas flows. Although the waterway remains open, shipping data shows tankers accumulating near the strait amid security concerns and potential insurance constraints.
“The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million barrels per day of crude oil from reaching markets,” said Jorge Leon, head of geopolitical analysis at Rystad Energy. He warned that without swift de-escalation, oil prices could see substantial upward repricing.
A sustained oil spike could reignite global inflation pressures and act as a drag on economic growth by raising costs for businesses and consumers alike.
OPEC+ agreed Sunday to a modest production increase of 206,000 barrels per day for April, but much of that supply still depends on safe tanker transit through the Middle East.
Analysts drew comparisons to the 1970s oil embargo. “The nearest historical analogue is the Middle East oil embargo, which pushed prices up 300% to around $12 per barrel in 1974,” said Alan Gelder of Wood Mackenzie. Adjusted for inflation, that equates to roughly $90 per barrel in today’s terms, a level that could be exceeded if supply losses intensify.
Energy-importing nations such as Japan face particular vulnerability. Nikkei futures fell 1.1% as traders assessed the potential impact on the country’s fully import-dependent oil supply.
Stocks Slide as Data Risks Loom
U.S. equity futures pointed lower, with S&P 500 futures down 0.8% and Nasdaq futures off 0.9%, reflecting broader market unease already heightened by concerns over AI-related valuations and stress in parts of the banking sector.
Currency markets showed mixed safe-haven flows. The dollar slipped 0.2% against the Swiss franc to 0.7673 but found support elsewhere. As a net energy exporter and issuer of the world’s primary reserve currency, the U.S. often benefits during global stress. The euro fell 0.3% to $1.1780.
The Japanese yen, typically considered a haven, was less straightforward given Japan’s reliance on imported oil. The dollar rose 0.2% to 156.31 yen and gained sharply against the Australian dollar, a common proxy for global risk sentiment.
Bond markets also reflected defensive positioning. Ten-year Treasury futures gained, with yields having dropped below 4% last week for the first time since late November.
Fixed income markets were already on edge after UK mortgage lender MFS entered administration amid allegations of financial irregularities. The firm had borrowed £2 billion, and its collapse unsettled credit markets and weighed on banking shares.
Investors now face a heavy week of U.S. economic data, including the ISM manufacturing survey, retail sales figures, and the closely watched monthly payrolls report. Any signs of economic weakness could further dent confidence following a disappointing fourth quarter, while simultaneously increasing expectations for Federal Reserve rate cuts.
Markets currently price in a 53% chance of a rate cut in June and approximately 60 basis points of easing by year-end.
With geopolitical tensions high and economic data looming, volatility looks set to remain elevated across energy, equity, currency, and bond markets, according to WNN.
– Nia Sanders
