US stock markets closed higher on Monday after a volatile day that saw oil prices surge past $100 a barrel before retreating following comments from Donald Trump. The Dow Jones Industrial Average jumped 230 points, while the S&P 500 and Nasdaq rose 0.83% and 1.38% respectively, reversing earlier losses triggered by Middle East tensions.
Oil prices hit a four-year high in morning trading, with Brent crude climbing to $119.50 a barrel amid escalating violence between US-Israeli forces and Iran. However, prices fell sharply after Trump stated the war with Iran was 'very complete', bringing Brent down to $85 a barrel by the close. West Texas Intermediate also dropped to $86 a barrel after reaching $103 earlier.
The volatility stemmed from airstrikes on at least five energy sites in and around Tehran, described as 'apocalyptic', and the effective closure of the Strait of Hormuz for a week. Kuwait's national oil company announced precautionary production cuts, while Bahrain declared force majeure after an Iranian attack set its refinery ablaze.
European and Asian markets suffered heavy losses, with the FTSE 100 down 1%, Germany's Dax falling 1.2%, and Japan's Nikkei 225 dropping 5%. The Stoxx Europe 600 erased all its gains for the year. Analysts noted that a deficit of 20 million barrels per day is straining global oil balances, with no immediate relief in sight.
Trump described the oil price surge as 'a very small price to pay' for global safety, predicting prices would drop rapidly once the conflict ends. However, Iran warned that further strikes could push oil above $200 a barrel. G7 finance ministers are reportedly considering a coordinated release of petroleum reserves to stabilise markets.
