Oil prices surged above $100 a barrel on Monday, reaching a four-year high and sending shockwaves through global markets before settling after US President Donald Trump indicated that the US-Israel war with Iran was nearing completion. Brent crude climbed as high as $119.50 a barrel in Asian trading, a 29% jump, before retreating to $85 by the close of US markets.
Wall Street experienced a sharp reversal: the Dow Jones Industrial Average closed up 230 points, while the S&P 500 and Nasdaq rose 0.83% and 1.38% respectively, after a morning sell-off triggered by fears of a sustained oil supply crunch. The volatility followed a weekend of escalating violence in the Middle East, with at least five energy sites near Tehran struck by airstrikes, prompting descriptions of 'apocalyptic' scenes.
Trump’s assessment that the conflict was 'very complete' helped calm markets, bringing oil prices down. Earlier, the president had described the surge as 'a very small price to pay' for safety and peace, predicting prices would drop once the threat from Iran was neutralised. However, Iran’s Revolutionary Guard Corps warned that oil could exceed $200 a barrel if the strikes continued.
European and Asian markets fared worse. The UK’s FTSE 100 fell 1%, Germany’s Dax dropped 1.2%, and France’s Cac 40 lost 1.8%. Japan’s Nikkei 225 plunged 5%, South Korea’s Kospi slumped 6.6%, and Australia’s ASX 200 ended 2.9% lower. The Stoxx Europe 600 fell 1.3%, erasing its gains for the year.
Adding to instability, Bahrain’s state oil company declared force majeure after an Iranian attack set its refinery ablaze, citing the regional conflict. The move releases the company from contractual obligations. The Strait of Hormuz, a key oil transit chokepoint, has been effectively closed for a week, exacerbating supply fears.
