Oil prices experienced dramatic swings on Monday, surging past $100 a barrel in early trading before settling lower after US President Donald Trump suggested the conflict with Iran was nearing completion. Brent crude reached a high of $119.50 a barrel, a four-year peak, before dropping to $85 a barrel by the close of US markets. The volatility rattled Asian and European exchanges, but US stocks rallied, with the Dow closing up 230 points.
The sharp rise in oil prices followed weekend airstrikes on at least five energy sites in and around Tehran, described as “apocalyptic” by some accounts. The Strait of Hormuz, a crucial trade artery for global oil shipments, has been effectively closed for a week. Kuwait’s national oil company announced a precautionary production cut amid retaliatory attacks by Iran.
European markets fell, with the FTSE 100 down 1%, while Japan’s Nikkei 225 dropped 5% and South Korea’s Kospi slumped 6.6%. Australia’s ASX 200 ended a volatile session 2.9% lower. Bahrain’s state oil company declared force majeure after an Iranian attack set its refinery ablaze, though it said local demand could still be met.
Earlier, Trump described the oil price surge as “a very small price to pay” for global safety, predicting prices would drop rapidly once the threat was eliminated. However, a spokesperson for Iran’s Revolutionary Guard Corps warned that prices could exceed $200 a barrel if the conflict continued. The G7 finance ministers were reported to be considering a coordinated release of petroleum reserves to stabilise markets.
