Brent crude oil rose 2% on Monday, approaching $114.85 a barrel, as investors weighed the risks of escalating conflict in the Gulf and its potential impact on global inflation and economic growth. The gain puts Brent on track for a record monthly rise, with prices up roughly 59% in March, surpassing the jump seen after Iraq’s invasion of Kuwait in 1990. U.S. crude added 1.5% to $101.16 a barrel.
Markets across Asia reacted sharply to the energy shock. Japan’s Nikkei index fell 2.8%, while MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.8%. European stocks recovered slightly, with the FTSE 100 and DAX edging up, while Wall Street futures pointed to modest gains after a recent sell-off.
Investors are monitoring conflicting developments in the Gulf. U.S. President Donald Trump warned Iran on social media that failure to reopen the Strait of Hormuz could trigger U.S. attacks on the country’s oil facilities and power plants. Tehran accused Washington of preparing a ground assault amid the deployment of additional troops in the region. Pakistan announced it is preparing to host “meaningful talks” aimed at ending the conflict in the coming days.
“Oil is the lightning rod right now,” said Eren Osman, managing director of wealth management at Arbuthnot Latham. “The biggest challenge for investors is the wide range of potential outcomes.” He added that a reopening of the Strait would be critical to calming markets. Madison Cartwright, senior geo-economics analyst at Commonwealth Bank of Australia, said Iran’s control of the Strait, which handles about 20% of the world’s oil and liquefied natural gas, gives Tehran little incentive to concede. The bank expects the conflict to continue until at least June.
The disruption has sent prices for oil, gas, fertiliser, plastic, aluminium, and aviation fuel sharply higher. Aluminium surged to four-year highs after Iranian airstrikes targeted two major producers over the weekend. Bruce Kasman, global head of economics at JPMorgan, warned that prolonged closure of the Strait could push crude oil toward $150 a barrel and create energy constraints for industrial consumers.
The energy shock has added pressure to global bond markets and accelerated expectations of higher interest rates. Ten-year U.S. Treasury yields stood at 4.372%, while the U.S. dollar hovered near a 10-month high at 100.25. The euro dipped to $1.1493, while the yen weakened to 159.5 against the dollar after hints of intervention from Japanese authorities.
Gold rose 1.1% to $4,542 an ounce, reflecting continued inflation concerns and geopolitical uncertainty, although demand for the metal as a safe haven has remained limited.
With the conflict showing no immediate signs of easing, investors are bracing for further volatility in energy, currency, and equity markets worldwide.
