Oil prices jumped sharply on Monday as the war between the US-Israeli alliance and Iran intensified, raising fears of major disruptions to global energy supplies.
Brent crude, the international benchmark, surged above $115 per barrel before closing at $104.31, while US benchmark West Texas Intermediate (WTI) climbed to about $115 per barrel – its highest level since 2022 – and settled at $102.17. The rises were the strongest prices recorded in more than three years.
The surge follows a dramatic rally from Friday, when Brent closed near to $92.69 and WTI at $90.90, before the conflict escalated at the weekend. Since Friday’s close, crude prices have jumped by more than 20 per cent as markets rapidly priced in the risk of prolonged supply disruptions across the Middle East.
The move also marks the first time oil has traded above $100 since 2022, when energy markets were shaken by Russia’s invasion of Ukraine, highlighting the scale of the geopolitical shock now facing global markets.
The sharp rise comes as the war disrupts production and shipping routes across the Middle East, one of the world’s most critical energy hubs. Oil markets have been struck by concerns that the war could continue to significantly restrict flows through the Strait of Hormuz, a vital maritime route that normally carries about 20 per cent of the world’s oil supply.
At the weekend, tanker traffic through the strait was halted and several regional producers began curbing output due to export constraints and security concerns, further tightening global supply.
Analysts say these disruptions could persist if the conflict continues to threaten oil infrastructure and transport routes in the Gulf.
Energy infrastructure across the region has also come under threat. Saudi Arabia's Defence Ministry said on X that it intercepted a drone heading to the Shaybah oilfield, adding to concerns about the vulnerability of Gulf energy assets.
Meanwhile, Bahrain’s Bapco Energies declared force majeure on certain group operations, after a recent attack on its refinery complex disrupted activities. In a statement, the company said the decision was taken after operations were affected by regional developments and the incident at its refinery facility, although it stressed that domestic energy supplies remain secure.
Contingency plans are in place to ensure uninterrupted supply to the local market, Bapco Energies said. It added that all domestic demand continues to be met despite the disruptions.
The site is Bahrain’s primary refining facility and a critical component of the country’s energy system. The site was recently expanded under the $7 billion Bapco Modernisation Programme, which aims to increase refining capacity to about 380,000 to 400,000 barrels per day and produce higher-value fuels.
Financial markets across Asia reacted immediately to the spike in oil prices and the widening conflict.
Japan’s Nikkei dropped more than six per cent shortly after Monday’s opening, trading at 51,740 points at 7.30am GST, as investors reacted to the surge in energy prices and geopolitical risks.
The sell-off spread across the region, with South Korea’s Kospi falling more than 6 per cent, while shares in Australia and New Zealand also opened significantly lower as investors moved away from riskier assets.
Global equities also fell sharply as investors considered the economic impact of higher energy costs and escalating geopolitical risks. The declines highlight concerns that rising energy costs could hit economic growth in Asia, where many economies are heavily dependent on imported oil.
