Oil prices surged on Monday as escalating military conflict in the Middle East threatened to disrupt global supply. Brent crude jumped 9 percent to $79.42 a barrel, and U.S. crude climbed 8.6 percent to $72.61 per barrel.
Military strikes by the United States and Israel on Iran, met with regional missile responses, have raised concerns about a prolonged conflict. President Donald Trump indicated the situation could last weeks. All eyes are on the Strait of Hormuz, a critical chokepoint for global oil and natural gas trade, where marine tracking sites show tankers amassing due to insurance and security concerns.
Analysts warn that an extended surge in oil prices could reignite global inflation and dampen economic demand. While OPEC+ agreed to a modest output increase, logistical challenges remain. Experts draw parallels to the 1970s oil embargo, suggesting significant price hikes are possible.
Global stock markets reacted negatively, with U.S. futures sliding. The dollar saw mixed performance, dipping against the Swiss franc but holding steady against the euro and strengthening against the Japanese yen and Australian dollar. Bond markets, however, saw yields fall as investors sought safe haven assets.
This volatile environment comes as investors brace for a week of key U.S. economic data, including manufacturing surveys, retail sales, and the crucial payrolls report, which could influence Federal Reserve interest rate decisions.