Global financial markets experienced extreme volatility on Monday as oil prices surged past $100 a barrel for the first time since Russia's invasion of Ukraine, before settling after US President Donald Trump indicated the US-Israel conflict with Iran was nearing completion. Brent crude hit a high of $119.50 a barrel before retreating to $85 by the close of US trading.
The Dow Jones Industrial Average closed up 230 points, while the S&P 500 and Nasdaq gained 0.83% and 1.38% respectively, reversing sharp morning losses. The recovery followed a CBS News report quoting Trump as saying the war with Iran is 'very complete' because 'they have no navy, no communications, they've got no air force'.
Asian and European markets had earlier suffered heavy losses. Japan's Nikkei 225 fell 5%, South Korea's Kospi slumped 6.6%, and Australia's ASX 200 dropped 2.9%. In Europe, the FTSE 100 declined 1%, Germany's Dax fell 1.2%, and France's Cac 40 lost 1.8%.
The oil price spike was triggered by weekend airstrikes on at least five energy sites in and around Tehran, with reports of 'apocalyptic' scenes in the Iranian capital. The Strait of Hormuz, a critical chokepoint for global oil shipments, has been effectively closed for a week. Kuwait's national oil company announced precautionary production cuts amid retaliatory attacks.
G7 finance ministers discussed a possible coordinated release of strategic petroleum reserves to stabilise prices. Meanwhile, Bahrain's state oil company declared force majeure after an Iranian attack set its refinery ablaze, further disrupting supply. The Iranian Revolutionary Guard Corps warned that oil could exceed $200 a barrel if the conflict continues.
