BY COMFORT OGBONNA
Oil prices surged on Monday, climbing as much as 9% after shipping traffic through the strategically vital Strait of Hormuz was severely disrupted by retaliatory Iranian attacks.
The escalation followed initial bombing raids by Israel and the United States that reportedly killed Iran’s Supreme Leader, Ali Khamenei, dramatically intensifying tensions across the Middle East and rattling global energy markets.
Brent crude futures jumped as high as $82.37 a barrel, marking a gain of 13% at one point in early trading and reaching their highest level since January 2025.
Prices later retreated from those peaks but remained sharply higher, trading up $6.91, or 9.5%, at $79.78 a barrel by 0748 GMT. U.S. West Texas Intermediate crude also surged, climbing to an intraday high of $75.33 per barrel, up more than 12% and the strongest level since June. It later pared gains to trade at $72.90 per barrel, still up $5.88, or 8.8%, on the day.
The twin benchmarks spiked as exchanges of missile and drone attacks in Gulf waters damaged tankers and brought shipping traffic to a near standstill in the Strait of Hormuz, a narrow but critical maritime corridor linking the Persian Gulf to the Arabian Sea.
On a typical day, roughly one-fifth of the world’s oil consumption flows through this chokepoint. Tankers transporting crude from Saudi Arabia, the United Arab Emirates, Iraq, Iran, and Kuwait rely on the passage, along with vessels carrying refined products such as diesel, jet fuel, and gasoline destined for major Asian economies including China and India.
Shipping data on Sunday showed more than 200 vessels, including oil and liquefied natural gas tankers, had dropped anchor outside the Strait, awaiting clarity on security conditions. Three tankers were reported damaged in weekend attacks, and one seafarer was killed in the violence, further underscoring the seriousness of the threat to maritime operations.
Analysts warn that any prolonged closure of the Strait would send oil prices significantly higher and potentially trigger supply shortages worldwide. A sustained disruption would not only affect exporters in the Gulf but also strain major importers.
However, some market observers suggest Iran may be cautious about maintaining a full blockade. Sentosa Shipbrokers noted that choking off oil flows for an extended period could alienate China, one of Tehran’s most important trading partners and a major buyer of Gulf crude, while also cutting into Iran’s own export revenues.
Asian governments have already begun assessing contingency plans. South Korea signaled it could release petroleum from its strategic reserves to support domestic industries if supply interruptions persist. India is exploring alternative shipping routes and supply sources to mitigate risk. The International Energy Agency, led by Executive Director Fatih Birol, said it is in close contact with major Middle Eastern producers. The Paris-based watchdog coordinates emergency releases of strategic petroleum reserves among developed nations during severe supply disruptions.
Despite the sharp early rally, prices trimmed some gains as trading progressed in Asia. Analysts suggested that part of the initial spike reflected a geopolitical risk premium that traders had already begun building into prices amid rising tensions. Before Monday’s surge, Brent crude had already risen more than 19% this year through Friday’s close, while WTI was up about 17%.
“Markets are acknowledging the seriousness of the conflict, but are also signaling that, for now, this is a geopolitical shock, not a systemic crisis,” said Priyanka Sachdeva, senior analyst at Phillip Nova, pointing to still-adequate global stockpiles as a buffer against immediate shortages.
Adding another layer to the supply picture, OPEC+ agreed on Sunday to a modest production increase of 206,000 barrels per day for April. However, analysts note that most producers in the alliance are already pumping near capacity, with Saudi Arabia holding the bulk of spare output that could be brought online quickly. That limits the group’s flexibility in the event of a deeper disruption.
Global visible oil inventories currently stand at approximately 7.827 million barrels, enough to cover about 74 days of demand, according to a recent note from Goldman Sachs. That figure sits near historical medians, suggesting the market is not yet in crisis territory.
Still, Citi analysts led by Max Layton expect Brent to trade between $80 and $90 per barrel this week as uncertainty persists. They outlined a baseline scenario in which leadership changes in Iran or a shift in U.S. strategy could lead to de-escalation within one to two weeks, potentially stabilizing markets.
In the United States, attention is turning to the impact on consumers. U.S. gasoline futures surged as much as 9.1% to $2.496 per gallon, the highest level since July 2024, before easing to $2.408 per gallon, up 5.4%. Analysts warn that retail gasoline prices could soon climb above $3 per gallon, a politically sensitive threshold in the world’s largest fuel-consuming nation. Such an increase could present economic and political challenges for President Donald Trump and his Republican Party ahead of November’s midterm elections.
For now, energy markets remain on edge, with traders closely watching developments in the Gulf. The trajectory of oil prices in the coming days will depend largely on whether the Strait of Hormuz reopens fully or whether the conflict deepens into a prolonged disruption of one of the world’s most critical energy arteries.