Oil prices surge after US-Israel strikes on Iran

Global benchmark prices rose by close to 10% in early trading, as investors reacted to escalating hostilities and the risk of restricted shipping through one of the world’s most important oil transit routes.

The rise came after the United States and Israel carried out attacks on Iranian targets, prompting retaliatory missile strikes by Iran on Israeli and United States military installations across the region. The confrontation has heightened fears of a broader conflict affecting energy exports.

According to data from the CME Group, the United States benchmark West Texas Intermediate crude was trading at $72.79 a barrel early on Monday, up about 8.6% from its previous closing price. Brent crude, the international benchmark, reached $79.41 a barrel, roughly 9% higher than at the end of last week, based on figures from FactSet. That marked its highest level in seven months.

Market analysts say the surge reflects concerns over supply rather than immediate shortages. Iran has warned ships against passing through the Strait of Hormuz, a narrow channel linking the Persian Gulf to the Arabian Sea. The strait is a key artery for global energy trade, carrying around one fifth of the world’s seaborne oil and gas shipments.

Although the waterway remains open, vessel tracking services indicate that some tankers have paused before entering the strait. Shipping companies are said to be reassessing security conditions and insurance coverage as tensions mount.

The Strait of Hormuz is bordered to the north by Iran and to the south by Oman and the United Arab Emirates. Oil and gas transported through it originate from major producers including Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran. Any prolonged disruption could affect global supply chains and prices.

United States President Donald Trump indicated that military operations would continue until American objectives were achieved. In response, Iranian officials have stated that they will not engage in negotiations while attacks persist.

Financial markets reacted beyond oil. Major stock indices in Asia and Europe fell in early trading, reflecting investor concerns that sustained instability in the Middle East could slow economic growth.

Whether the increase in crude prices will translate into higher petrol and diesel prices depends on how long the disruption fears last. Retail fuel prices are influenced by several factors, including crude oil costs, refining capacity, distribution expenses, currency exchange rates and national taxation policies.

In many countries, fuel retailers purchase oil in advance or use hedging strategies to manage volatility, meaning immediate price changes at the pump are not always guaranteed. Governments may also intervene to cushion consumers from sudden spikes, depending on domestic policy frameworks.

However, if crude prices remain elevated over several weeks, the cost of fuel for motorists is likely to rise. Higher transport costs can in turn affect food prices and the cost of manufactured goods, potentially contributing to broader inflationary pressures.

Energy economists note that markets often react sharply to geopolitical risks, even if physical supply remains uninterrupted. Previous tensions in the region have triggered temporary price surges that later eased once fears of disruption subsided.

The current situation remains fluid. There has been no official closure of the Strait of Hormuz, and oil exports from Gulf producers are continuing. Nevertheless, the concentration of global energy flows in a single narrow passage makes it particularly sensitive to military escalation.

For consumers, the key question is duration. A short-lived spike may have limited long-term impact, while a prolonged conflict could sustain higher energy costs worldwide.

Governments and central banks will be monitoring developments closely, as energy prices play a significant role in shaping inflation, consumer spending and economic stability.

With military exchanges continuing and diplomatic efforts uncertain, global energy markets are likely to remain volatile in the days ahead.