Oil jumps and stocks fall as Iran conflict disrupts Gulf shipping

Oil prices surged and Asian stock markets fell on Monday amid escalating turmoil in the Middle East following US and Israeli strikes on Iran and mounting disruption around the Strait of Hormuz.

In early Asian trading, Brent crude climbed to just over $80 per barrel from Friday’s close of $72.87 before easing to below $79. The international benchmark had already risen last week ahead of the strikes, which began on Saturday and reportedly killed Iran’s supreme leader, Ayatollah Ali Khamenei.

Japan’s Nikkei index dropped 2.2 percent in early trade, while Sydney’s market was 0.5 percent lower. Gold, seen as a safe-haven asset during times of uncertainty, rose two percent.

US President Donald Trump called on Iranians to rise up against their government and said the conflict could last “four weeks.” In response, Iran launched missile and drone attacks across the Gulf, killing four people and injuring dozens, according to the UAE foreign ministry.

Although Iran has not formally closed the Strait of Hormuz, a key route for about 20 percent of global seaborne oil, its Revolutionary Guards warned ships against transiting the waterway. On Sunday, two vessels were reportedly struck, one off Oman and another off the UAE, according to the British maritime security agency UKMTO. Iranian state television said an oil tanker was hit and was sinking after attempting to pass through the strait.

Shipping companies have begun suspending routes through the area, raising concerns about supply disruptions. Analysts warned that if the strait were effectively blocked, the global oil market could lose between 8 million and 10 million barrels per day of supply. Amena Bakr of Kpler said prices could reach $90 per barrel, while others cautioned that levels above $100 could not be ruled out.

OECD countries are required to hold at least 90 days of oil reserves, but analysts warned that even strategic stockpiles might not offset a prolonged disruption. High oil prices were described as a political vulnerability for Trump, who has pledged to keep energy costs low ahead of US mid-term elections later this year.

Gas prices are also expected to rise, as Qatar is a major exporter of liquefied natural gas, adding to inflationary pressures. Economists warned that sustained increases in energy and shipping costs could weigh on global growth, particularly in sectors such as air transport, maritime shipping and tourism.

“If it’s a matter of three days, it’s not serious. But if it’s over a longer period, then it will have an additional recessionary effect,” said Eric Dor, an economist at the IESEG School of Management in Paris.