Global oil prices have surged above Sh13,600 per barrel as the conflict involving Iran enters its third week, raising fears of supply disruptions through the Strait of Hormuz.
Asian stock markets mostly declined amid uncertainty, while governments and diplomats seek ways to ensure safe tanker passage through the strategic waterway, a key route for global energy supplies.
The sudden rise in crude prices on Monday came as fighting between the United States, Israel and Iran continued with little sign of de-escalation, while diplomats attempted to ensure safe passage for oil tankers through the strategic waterway.
Benchmark crude prices climbed rapidly in early trading, with Brent crude rising to about Sh14,460 per barrel before easing slightly to around Sh14,140, while West Texas Intermediate increased to approximately Sh13,710 per barrel.
The spike followed comments by US President Donald Trump, who said over the weekend that military forces had struck targets on Kharg Island, a major hub responsible for handling most of Iran’s oil exports.
However, Iran’s Fars News Agency reported that the strikes had not damaged oil infrastructure on the island.
President Trump also warned that further attacks could extend to energy infrastructure if Iran interfered with tanker traffic through the Strait of Hormuz, which has been largely disrupted since the conflict escalated on February 28.
The US leader called on other countries to help secure the route by deploying naval forces to keep the passage open.
“The countries of the world that receive oil through the Hormuz Strait must take care of that passage, and we will help a lot,” he said in a social media post.
Despite the call, some governments signalled reluctance to send military assets. Japan said it was not currently considering launching a maritime security operation, while Australia also indicated it would not deploy naval ships to the region.
Meanwhile, Iran’s Foreign Minister Abbas Araghchi rejected suggestions of negotiations with Washington to end the conflict.
“We don’t see any reason why we should talk with Americans, because we were talking with them when they decided to attack us,” he said during an interview with CBS’s Face the Nation programme.
He added that Iran had not requested a ceasefire or negotiations but remained open to discussions with countries seeking assurances over the safety of their vessels in the Gulf.
The conflict continued to escalate on Monday, with Saudi Arabia reporting that it had intercepted more than 60 drones since midnight.
Flights at Dubai International Airport were temporarily suspended after a drone-related incident sparked a fire near the airport.
Iran also accused Israel of targeting fuel depots in Tehran, describing the attacks as “ecocide” because of potential long-term environmental and health impacts.
The intensifying conflict has unsettled financial markets, particularly in Asia, where most stock exchanges closed lower.
Markets in Tokyo, Shanghai, Sydney, Taipei, Manila, Mumbai, Bangkok and Jakarta all declined, reflecting investor concerns over the potential economic impact of the war.
However, shares in Hong Kong, Seoul and Singapore recorded gains, while European markets in London, Frankfurt and Paris opened higher.
Analysts say the key factor influencing markets will be how quickly shipping traffic can resume through the Strait of Hormuz.
Michael Brown, a market analyst at Pepperstone, said that the economic impact would depend more on the reopening of the shipping lane than on the end of hostilities.
“The longer the Strait is impassable, the tighter commodity supply will become, thus the higher prices will likely go and the greater the inflationary pressure that will follow,” he said.
To ease pressure on global oil markets, members of the International Energy Agency have agreed to release a record 400 million barrels from strategic reserves.
Japan has already begun releasing oil from its national stockpiles, with other countries expected to follow.
The developments come amid broader economic concerns, with data showing that US economic growth slowed significantly in the fourth quarter.
According to revised figures, the United States economy expanded by the equivalent of roughly Sh106 trillion, a much slower pace than earlier estimates.
Investors are also closely watching upcoming policy meetings at major central banks including the Federal Reserve, Bank of England and the European Central Bank.
Although interest rates are expected to remain unchanged, any comments regarding the economic impact of the Iran conflict are likely to be scrutinised by global markets already unsettled by rising energy prices and geopolitical uncertainty.
Economists warn that if oil prices remain above Sh13,600 per barrel for an extended period, the resulting rise in fuel and transport costs could push inflation higher and slow economic growth across many countries.