Global oil prices climbed sharply above $100 per barrel on Monday as the ongoing conflict involving Iran entered its third week, heightening fears of disruption to energy supplies and rattling financial markets across Asia.
Crude prices spiked early in trading after former U.S. President Donald Trump revealed that U.S. forces had carried out strikes on military targets on Kharg Island in the Persian Gulf. The island is strategically significant as it handles nearly all of Iran’s oil exports.
Trump also warned that further attacks could target energy infrastructure if Iran attempts to interfere with shipping through the Strait of Hormuz — a critical maritime chokepoint for global oil transport that has effectively been closed since U.S.-Israeli operations began on February 28.
However, Iran’s state-linked Fars News Agency reported that no oil facilities were damaged during the strikes.
Tensions Rise Over Hormuz Shipping Route
Trump called on major oil-importing nations to deploy naval forces to ensure safe passage for tankers through the strait, urging countries such as China, France, Japan, South Korea and the United Kingdom to contribute.
“The countries of the world that receive oil through the Hormuz Strait must take care of that passage, and we will help — a lot,” Trump wrote on Truth Social.
Despite the appeal, some countries appeared hesitant. Japan said it was “not at the moment considering issuing a maritime security operation,” while Australia announced it would not send naval ships to the region.
Iran Rejects Negotiations With Washington
Iran signaled it has no intention of negotiating with the United States. The country’s foreign minister, Abbas Araghchi, said Tehran saw no reason to engage in talks.
“We don’t see any reason why we should talk with Americans, because we were talking with them when they decided to attack us,” Araghchi said during an interview with CBS’s Face the Nation.
He added that Iran had never requested a ceasefire or negotiations, though the country was willing to discuss safe passage for ships with other nations concerned about their vessels moving through the Gulf.
Continued Fighting Across the Region
Hostilities continued on Monday with drone activity reported across the region. Saudi Arabia said it intercepted more than 60 drones overnight, while flights were briefly suspended at Dubai International Airport after a drone-related incident sparked a nearby fire.
Araghchi also condemned Israeli strikes on fuel depots in Tehran, describing them as “ecocide” because of potential long-term environmental and health risks.
Oil Markets React
Energy markets reacted immediately to the escalating tensions.
- Brent crude surged to as high as $106.50 before easing slightly to around $104.
- U.S. benchmark West Texas Intermediate rose above $100 per barrel.
In response to the price spike, Japan announced it would begin releasing oil from its strategic reserves after the International Energy Agency signaled that member countries would release stockpiled supplies.
IEA members agreed last week to release a record 400 million barrels from reserves in an attempt to stabilize global energy markets.
Stock Markets Under Pressure
Concerns about an energy shock and potential slowdown in global growth weighed on Asian equities. Major markets including Tokyo, Shanghai, Sydney, Mumbai and Bangkok closed lower, while Hong Kong, Seoul and Singapore posted modest gains.
European markets opened higher, with London, Frankfurt and Paris edging upward.
Analysts say the key factor for markets will be when shipping through the Strait of Hormuz returns to normal.
“The longer the Strait remains impassable, the tighter commodity supply becomes,” said Michael Brown of Pepperstone. “That means higher prices and stronger inflationary pressures globally.”
Economic Concerns Grow
The geopolitical tensions are emerging alongside signs of slowing economic growth in the United States. Revised data showed fourth-quarter U.S. GDP expanded by just 0.7 percent, significantly lower than the earlier estimate of 1.4 percent.
Meanwhile, the Federal Reserve’s preferred inflation measure showed price growth easing to 2.8 percent in January before the latest surge in energy costs.
Investors are also watching policy meetings this week at several major central banks, including the Bank of England and the European Central Bank, for signals on how the conflict could affect the global economic outlook.
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