Oil prices surged in early Asian trading on Monday, breaking above $100 per barrel for the first time in nearly four years as the Iran conflict escalated and Ayatollah Mojtaba Khamenei was chosen as supreme leader.
WTI crude was trading at $108.66, up $17.76 or 19.54%, while Brent crude was at $108.69, up $16.00 or 17.26%.
The rally follows a dramatic escalation in the conflict between Iran, the United States, and Israel over the weekend, with attacks on energy infrastructure and military targets across the region heightening fears that oil flows from the Middle East could be disrupted for weeks.
Israel struck major fuel storage facilities near Tehran, while Iran continued launching drone and missile attacks across the region. A drone strike damaged a desalination plant in Bahrain, a missile barrage injured five people in central Israel, and a seventh U.S. service member died following an Iranian counterattack in Saudi Arabia.
Meanwhile, Iran’s Assembly of Experts named Ayatollah Mojtaba Khamenei, the son of the slain Supreme Leader Ali Khamenei, as the country’s new supreme leader early on Monday. The appointment signals continuity in Iran’s hardline leadership, undermining the efforts of both the U.S. and Israel to alter the regime.
Beyond oil prices, financial markets also suffered, with S&P 500 futures down and Nasdaq-100 futures both falling by close to 1.6% as investors reacted to the surge in energy prices and geopolitical risk.
Fears of prolonged supply disruptions, including potential attacks on regional energy infrastructure and tanker traffic, are now being priced in to markets. Energy traders are closely watching whether the conflict will affect production or exports from major Gulf producers. Any disruption to flows through the Strait of Hormuz could remove millions of barrels per day from global markets and push prices significantly higher.
The surge in crude prices has also strengthened the U.S. dollar and raised fears of an energy-driven inflation shock, particularly for major oil-importing economies.
The Newsmatrics reports that petrol pump prices moved above N1,000 amid fears of further increases at Dangote Refinery raised gantry prices for the second time in a week to N977 per litre.
Reports suggest that the Nigerian National Petroleum Company Limited is now leveraging its international trading links to source crude from third parties for the refinery to prevent domestic supply disruptions.
Iraq’s fuel exports have already dropped by70 per cent to 800,000 barrels per day as the Iran-US conflict has resulted in an effective closure of the Strait of Hormuz, which accounts for 20 per cent of global oil flows.
Shipping companies have withrawn vessels from the route after insurers suspended cover for ships passing through the route.
