Global oil prices climbed above $100 per barrel on Monday as tensions in the ongoing conflict between Iran and Israel entered a third week, raising concerns about energy supply disruptions and the stability of global markets.
Asian stock markets mostly declined amid uncertainty surrounding the conflict and its potential impact on international trade routes. The situation has also intensified diplomatic efforts aimed at ensuring the safe passage of oil tankers through the critical Strait of Hormuz, a major shipping route for global oil supplies.
Oil prices surged shortly after Donald Trump announced that military forces had struck targets on Kharg Island, a key hub for Iran’s oil exports located in the Persian Gulf. The U.S. leader warned that attacks could extend to energy infrastructure if Iran interferes with shipping through the strategic waterway.
Iranian officials, however, stated that no oil facilities were damaged during the strikes.
Trump also urged several countries, including China, France, Japan, South Korea and the United Kingdom, to contribute naval support to help keep the shipping route open. However, Japan said it was not currently considering launching a maritime security operation, while Australia announced it would not deploy naval vessels to the region.
Iran’s Foreign Minister, Abbas Araghchi, said his country was not interested in negotiations with the United States, stating that there was no reason for talks after the recent attacks. However, he indicated that Iran was open to discussions with countries seeking assurances for the safe passage of their vessels through the region.
Meanwhile, hostilities continued with both sides exchanging attacks. Saudi Arabia reported intercepting more than 60 drones overnight, while flights were temporarily suspended at Dubai International Airport following a drone-related incident that caused a fire near the facility.
The escalating tensions have driven up crude oil prices, with Brent Crude rising to about $106.50 before easing slightly to around $104 per barrel, while West Texas Intermediate crude climbed above $100.
In response to the surge in oil prices, Japan announced the release of some of its strategic oil reserves following guidance from the International Energy Agency. Member countries of the agency recently agreed to release a record 400 million barrels from emergency stockpiles in an effort to stabilise the market.
Concerns about the potential economic impact of the conflict also weighed on global financial markets. Most Asian markets recorded losses, though some exchanges in Hong Kong, Seoul and Singapore posted gains, while markets in London, Frankfurt and Paris opened higher.
Analysts say the economic outlook will largely depend on how quickly shipping through the Strait of Hormuz returns to normal, as prolonged disruption could tighten global commodity supplies, push prices higher, and increase inflationary pressures worldwide.
Economic concerns were further heightened by new data showing slower-than-expected growth in the U.S. economy, while recent inflation figures had declined slightly before the surge in energy prices.
Post comments (0)