Global oil prices surged above $100 per barrel as the ongoing war involving Iran entered its second week, raising concerns about disruptions to energy production and shipping routes in the Persian Gulf, one of the world's most critical oil regions.
After trading resumed on the Chicago Mercantile Exchange, the price of Brent crude, the international benchmark, climbed to about $107.97 per barrel, a 16.5% increase from its previous close of $92.69 on Friday.
Meanwhile, West Texas Intermediate (WTI) crude, the main U.S. benchmark, rose to around $106.22 per barrel, up 16.9% from Friday's closing price of $90.90. Prices continued to fluctuate as markets reacted to developments in the conflict.
Strait of Hormuz disruption raises Global supply fears
The sharp increase in oil prices comes as the conflict threatens energy infrastructure and shipping routes in the Persian Gulf, a region responsible for a large share of global oil exports.
About 15 million barrels of crude oil per day, nearly 20% of the world's oil supply, typically pass through the Strait of Hormuz, according to energy research firm Rystad Energy. The narrow waterway, bordered by Iran to the north, serves as a key transit route for oil and gas shipments from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates, and Iran.
However, the threat of Iranian missile and drone attacks has significantly reduced tanker traffic through the strait, increasing fears of supply shortages and driving prices higher.
The last time U.S. crude futures traded above $100 per barrel was on June 30, 2022, when prices reached $105.76.
Attacks on Oil Facilities add to Market Tensions
The surge in prices follows several attacks on energy infrastructure during the conflict. Iranian authorities said Israeli strikes on oil depots in Tehran and a petroleum transfer terminal early Sunday killed four people.
Israel's military said Iran's armed forces were using the targeted facilities to store fuel for missile operations.
Iranian parliament speaker Mohammad Bagher Qalibaf warned that continued attacks could have a serious impact on the country's oil industry.
Iran currently exports around 1.6 million barrels of oil per day, most of which is sold to China. If these exports are disrupted, major importers may need to find alternative supplies, potentially pushing prices even higher.
Rising Energy Costs Spark Economic Concerns
The surge in oil prices since Israel and the United States launched strikes on Iran on March 1 has unsettled financial markets. Analysts warn that prolonged high energy prices could increase inflation and reduce consumer spending, particularly in the United States, which remains a key driver of global economic growth.
Natural gas prices have also risen, though more moderately. Gas was trading around $3.33 per 1,000 cubic feet, up 4.6% from Friday's close of $3.19, after climbing about 11% last week.
Financial markets reacted negatively to the developments. U.S. stock index futures fell late Sunday, indicating potential declines when Wall Street opens. Futures for the S&P 500 dropped 1.6%, while Dow Jones futures fell 1.8% and Nasdaq futures declined 1.5%.
On Friday, the S&P 500 fell 1.3%, the Dow Jones Industrial Average dropped as much as 945 points before closing about 450 points lower, and the Nasdaq Composite lost 1.6%.
Trump Downplays Impact of Oil Price Spike
Despite the market volatility, U.S. President Donald Trump dismissed concerns over rising oil prices, describing them as a temporary consequence of the conflict.
In a message posted on social media, Trump said short-term increases in oil prices were a "very small price to pay" if the conflict results in eliminating what he described as Iran's nuclear threat. He added that energy prices could fall again once the security situation stabilises.
Analysts warn that if oil prices remain above $100 per barrel for an extended period, it could place significant pressure on the global economy, increasing fuel and transportation costs and driving inflation worldwide.
