Oil prices jumped sharply on Monday as U.S. and Israeli attacks on Iran, followed by retaliatory strikes across the Gulf, sent shockwaves through global energy markets and raised fears of major supply disruptions.
Traders moved quickly to price in the risk that oil exports from Iran and other Middle Eastern producers could slow or be halted altogether. Attacks on vessels traveling through the Strait of Hormuz, the narrow gateway between the Persian Gulf and open seas, have intensified concerns over the security of the world’s most important oil corridor.
U.S. benchmark West Texas Intermediate rose to $72.79 per barrel early Monday, up 8.6% from about $67 on Friday, according to CME Group data. International benchmark Brent crude climbed to $79.41 per barrel, a seven-month high and a gain of roughly 9%, according to FactSet.
Energy analysts warned that prolonged instability would translate into higher fuel and consumer prices worldwide. With inflation already pressuring household budgets, rising oil costs could further drive up gasoline, food, and transportation expenses.
About 15 million barrels of crude oil per day, roughly 20% of global supply, pass through the Strait of Hormuz, according to Rystad Energy. Tankers moving through the strait carry oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran, making the passage a critical artery for world trade.
Iran previously disrupted traffic through the strait during military drills in February, sending oil prices up nearly 6% at the time. Analysts say the current conflict poses a far greater threat to shipping routes and export flows.
In an attempt to stabilize markets, eight members of the OPEC+ announced plans to increase crude production by 206,000 barrels per day in April. The countries boosting output include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman. The decision had been scheduled before the conflict began and exceeded analysts’ expectations.
Despite the increase, experts caution that higher production may offer limited relief if transport routes remain under threat. Rystad Energy’s head of geopolitical analysis, Jorge Leon, said markets are now more focused on whether oil can physically move through the Gulf than on spare production capacity.
Iran currently exports about 1.6 million barrels of oil per day, most of it to China. Any interruption could force Beijing to seek alternative suppliers, adding further upward pressure on prices. Analysts note that China has large strategic reserves and could increase imports from Russia if needed.
With missile strikes and drone attacks continuing across the region, investors remain on edge, and energy markets are bracing for further volatility as the Middle East conflict threatens to reshape global oil supply flows.