Oil prices retreated slightly from earlier highs on Monday but remained sharply higher, reaching levels not seen since mid-2022. The surge followed supply cuts by several major producers and growing fears that the expanding conflict between the United States, Israel, and Iran could disrupt global energy shipments for an extended period.
Brent crude futures rose by $15.51, or 16.7%, to $108.20 per barrel by 0642 GMT, putting the benchmark on track for one of its largest single-day gains on record. U.S. West Texas Intermediate (WTI) crude also climbed strongly, gaining $14.23, or 15.7%, to $105.13 per barrel.
Earlier in the session, oil prices spiked even higher. WTI surged 31.4% to an intraday peak of $119.48 per barrel, while Brent crude climbed as much as 29% to $119.50. The rally followed a strong week for the energy market, with Brent already rising 27% and WTI jumping 35.6%.
Concerns about disruptions to global oil shipments are intensifying, particularly around the Strait of Hormuz. The narrow waterway between Iran and Oman is one of the world’s most critical energy routes, handling roughly one-fifth of global oil supply. Increased security risks and tanker disruptions have slowed shipping activity, leaving Asian energy buyers particularly exposed to potential supply shortages.
Oil prices eased slightly after the Financial Times reported that finance ministers from the Group of Seven (G7) and the International Energy Agency may discuss releasing emergency oil reserves to stabilize the market. Additional supply signals also emerged as Saudi Aramco offered prompt crude shipments through a series of rare tenders.
However, analysts warn that the outlook remains highly uncertain. According to Vasu Menon, managing director for investment strategy at OCBC, oil prices are likely to remain under upward pressure unless shipping flows through the Strait of Hormuz return to normal and geopolitical tensions ease.
Several Middle Eastern producers have already started cutting output. Iraq and Kuwait have reduced oil production following earlier reductions in liquefied natural gas exports from Qatar, as the conflict continues to disrupt regional supply chains. Analysts expect the United Arab Emirates and Saudi Arabia could also be forced to cut production if storage facilities reach capacity.
Energy infrastructure across the region has also been affected. Bahrain’s BAPCO refinery declared force majeure after an attack on its facilities, while a fire broke out in the UAE’s Fujairah oil industry zone after debris fell into the area. Saudi Arabia’s defense ministry also reported intercepting a drone headed toward the Shaybah oilfield.
Political developments in Iran have further heightened market tensions. Tehran named Mojtaba Khamenei as the successor to his father, Ali Khamenei, signaling that hardline leadership remains firmly in control as the conflict continues with the United States and Israel.
Some analysts believe this development could prolong the conflict. Satoru Yoshida, a commodities analyst at Rakuten Securities, said the leadership change could complicate U.S. President Donald Trump’s goal of regime change in Iran and reinforce expectations that Tehran will continue targeting energy infrastructure and restricting passage through the Strait of Hormuz.
As a result, market participants have accelerated oil purchases. Yoshida suggested that WTI crude could soon rise to $120 per barrel and potentially reach $130 if tensions continue to escalate.
The conflict could also leave consumers and businesses facing weeks or even months of elevated fuel costs. Even if hostilities ease quickly, damaged facilities, disrupted logistics, and heightened security risks could delay the recovery of global energy supply.
Daniel Hynes, senior commodity strategist at ANZ, warned that further production shutdowns could significantly extend the supply disruption. If producers are forced to close oil wells, restoring output could take time even after the conflict subsides.
Supply disruptions are already severe in some regions. Iraqi oil production from its main southern fields has reportedly dropped by around 70% to 1.3 million barrels per day as exports through the Strait of Hormuz remain blocked. Meanwhile, crude storage facilities have reached full capacity, according to officials from the state-owned Basra Oil Company.
Kuwait Petroleum Corporation has also begun reducing production and declared force majeure on oil shipments, although the company has not specified how much output will be cut.
Political tensions continue to escalate. Israel’s military has warned it could target any successor to Iran’s leadership, while U.S. President Donald Trump stated the war may only end once Iran’s military and ruling structure are dismantled.
As oil prices surged, U.S. Senate Democratic leader Chuck Schumer called on the Trump administration to release crude oil from the Strategic Petroleum Reserve to stabilize markets and ease pressure on consumers facing rising fuel costs.
