Oil prices climbed sharply to about $105.15 a barrel on Monday as the US-Israel conflict with Iran entered its third week, rattling global markets and raising fresh fears about fuel costs, inflation and economic stability. The surge reflects growing anxiety that the fighting could disrupt crucial energy supplies from West Asia.
Traders pushed crude higher amid reports of threats to oil infrastructure and shipping routes across the Gulf region. At the centre of market worries lies the Strait of Hormuz, a strategic passage that carries nearly one-fifth of the world’s oil shipments. Any disturbance here will cause shockwaves to the global energy supply chains.
Iran’s measures to curtail tanker shipments and attacks on Gulf energy targets have added to the supply forecast. Experts believe that any temporary halt in the supply of millions of barrels of oil per day will cause prices to rise sharply, especially if geopolitical issues are not resolved.
The price increase has already triggered volatility in the commodities market, with traders preparing for escalation that could extend the rally.
Market sentiment has deteriorated with reports of military pressure on key export infrastructure, including that related to Iran's oil hub on Kharg Island. The island serves as a hub for the country's oil exports, making it a focal point of global energy security.
Although some energy operations are underway, uncertainty over production and exports has led to speculative buying, according to energy experts, who are concerned that this conflict might drive oil prices even higher than the current $100-plus levels.
The conflict has also prompted cautious responses from governments and oil producers, who are closely monitoring the situation to avoid supply shocks.
The oil price surge is now affecting financial markets, with stocks showing mixed trends as investors recalculate growth prospects in the new high-cost environment. Economists have warned that sustained oil prices above $100 could trigger inflation and slow the global economy.
Consumers will soon feel the pinch of higher fuel and transportation costs, further straining their already pressured pockets from previous price cycles.
Yet with no clear signs of de-escalation, the conflict’s third week has left the world confronting a familiar question: how long can the global economy absorb another oil shock?