Oil prices jump 9 per cent amid US/Israel war on Iran

Oil prices surged on Monday while global equities slid, as escalating hostilities between the United States, Israel, and Iran rattled energy markets and heightened fears of a prolonged supply disruption in the Middle East.

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Benchmark crude grades recorded sharp gains in early trading. West Texas Intermediate (WTI), the US light sweet crude, rose to $72.79 per barrel, up 8.6 per cent from about $67 on Friday, according to data from the CME Group, Al Jazeera reported.

Brent crude, the international benchmark, climbed 9 per cent to $79.41 per barrel from $72.87 on Friday — a seven-month high — based on figures from FactSet.

The rally followed US and Israeli strikes on Iranian targets and retaliatory missile attacks by Iran against Israeli and US military installations across the region.

Traders are betting that oil supplies from Iran and other key producers in the Middle East could slow significantly or even halt if the conflict deepens.

US President Donald Trump has suggested that military operations would persist until American objectives are achieved, further fuelling concerns of a drawn-out confrontation.

He also announced Sunday that US forces have sunk nine Iranian Navy ships.

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The attacks have caused the death of over 250 people in Iran, including its clerical leader Ayatollah Ali Khamenei and several military leaders. The casualty also includes 185 schoolgirls who were killed when US and Israeli missiles hit their school.

The US has confirmed the death of three American soldiers while Israel has confirmed 10 deaths of its citizens from Iranian missiles.

Focus shifts to Strait of Hormuz

Attention has turned to the strategically vital Strait of Hormuz, a narrow shipping lane through which roughly one-fifth of the world’s seaborne oil trade passes.

The strait, bordered to the north by Iran, serves as a transit route for crude and liquefied natural gas exports from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran.

Although the waterway has not been formally closed, marine tracking data indicated that tankers were building up on either side of the strait, as operators grew wary of potential attacks or struggled to secure insurance coverage for voyages through the corridor. Two vessels were reportedly attacked on Sunday while transiting the channel.

“The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million barrels per day of crude oil from reaching markets,” Jorge Leon, head of geopolitical analysis at Rystad Energy, told the Reuters.

“Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil,” he added.

Higher global energy prices typically translate into increased costs for consumers, from petrol at filling stations to groceries and other essential goods and services . The latest surge comes at a time when many households are still grappling with the impact of elevated inflation.

In Nigeria, the impact of the surge in the coming days could be dire if the war persists and possibly, affect the value of the local fiat that has enjoyed considerable stability across both the official and unofficial markets in recent months amidst ongoing economic reforms.

READ ALSO: WHO raises alarm over reported hospital damage as US/Israel–Iran conflict escalates

The current tensions echo events in mid-February, when Iran temporarily shut parts of the Strait of Hormuz for what it described as a military drill. Oil prices jumped about 6 per cent in the days that followed, Al Jazeera reported.

OPEC+ moves to calm markets

Amid the volatility, eight members of the OPEC+ alliance announced plans on Sunday to raise output.

The Organisation of the Petroleum Exporting Countries, at a meeting scheduled before the outbreak of hostilities, said it would increase production by 206,000 barrels per day in April — a larger boost than analysts had anticipated.

The countries set to raise output are Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.

The move is seen as an attempt to cushion markets against supply shocks. However, analysts caution that sustained disruptions in the Strait of Hormuz could outweigh the impact of the additional barrels, keeping oil prices elevated in the near term.