Oil prices jumped to their highest levels in five months while Asian markets tumbled on Monday, following coordinated airstrikes by the United States and Israel on Iran's key nuclear facilities. The escalation has sparked fears of a broader conflict in the Middle East, with particular concern over the potential closure of the Strait of Hormuz a strategic waterway that handles nearly 25 percent of global oil trade and 20 percent of liquefied natural gas movement.
Brent crude rose 2.7 percent to $79.12 a barrel, and US crude climbed 2.8 percent to $75.98. Market participants anticipate further gains, especially if Iran retaliates by obstructing the Strait, which at its narrowest point is just 33 kilometers wide. Tehran has long threatened this move but has never followed through until now, as Iran's Press TV reported that the Iranian parliament has approved a measure to shut down the waterway in response to the US attack.
Investor anxiety has reverberated across Asian markets. Tokyo’s Nikkei dropped 0.6 percent, Seoul declined 1.4 percent, Sydney fell 0.7 percent, and the MSCI Asia-Pacific index outside Japan dipped 0.5 percent. In Europe, early indicators were also negative: EUROSTOXX 50 futures slid 0.7 percent, FTSE futures dropped 0.5 percent, and Germany’s DAX fell 0.7 percent. Meanwhile, S&P 500 and Nasdaq futures in the US showed moderate resilience, falling 0.5 and 0.6 percent, respectively.
In the currency market, the US dollar edged up 0.3 percent against the yen, while the euro weakened 0.3 percent. Gold slightly declined by 0.1 percent to $3,363 per ounce. Surprisingly, US Treasury yields edged higher rather than lower, with 10-year yields up by 2 basis points to 4.397 percent, indicating no immediate rush toward safe-haven assets.
Analysts warn that further disruptions, whether full or selective, could send oil prices soaring. JPMorgan cautioned that regime change scenarios in the Middle East have historically led to oil price surges of up to 76 percent. Vivek Dhar from Commonwealth Bank of Australia suggested that selective tanker disruptions may be a more likely move by Tehran, predicting Brent crude could spike to at least $100 per barrel in such a case. As the crisis evolves, global markets brace for heightened volatility, hinging largely on Iran’s next move and the international response to the escalating conflict.
