Post by : Bianca
Haleem
Global stock markets dropped sharply on Monday while oil prices surged above $100 per barrel as the escalating conflict between the United States, Israel and Iran raised fears of major disruptions to global energy supplies.
The rise in oil prices came after the United States and Israel carried out fresh airstrikes across Iran over the weekend, targeting several locations including oil depots. The attacks intensified tensions in the region and increased concerns about the stability of oil shipments from the Gulf.
Adding to the uncertainty, Iran on Sunday announced that Mojtaba Khamenei would succeed his father, Ali Khamenei, as the country’s Supreme Leader. The move signals that hardline leadership remains firmly in control of Iran during the ongoing conflict.
The growing crisis has already started affecting global markets. On Monday morning in Asia, Brent crude oil prices rose nearly 24% to $114.74 per barrel, while Nymex light sweet crude increased by more than 26% to $114.78.
Stock markets across the Asia-Pacific region reacted sharply to the rising tensions. Japan’s Nikkei 225 index fell by more than 7%, while Hong Kong’s Hang Seng index dropped over 3%. Australia’s ASX 200 also declined by more than 4%.
South Korea’s Kospi index experienced one of the steepest declines, falling more than 8%. The sudden drop forced authorities to activate a 20-minute trading halt through a circuit breaker mechanism designed to control panic selling. The same measure was triggered earlier last week when the Kospi plunged by 12%.
Energy markets are particularly concerned about disruptions in the Strait of Hormuz, one of the world’s most important oil shipping routes. Around 20% of global oil supply normally passes through this narrow waterway.
However, shipping traffic through the strait has nearly stopped since the conflict began a week ago, creating fears of a major supply shortage. The halt in shipments has pushed oil prices sharply higher in a very short time.
During early Asian trading, oil prices jumped nearly 10% within minutes and climbed another 10% shortly afterward as markets reacted to the escalating crisis and damage to energy infrastructure in Iran and nearby Gulf regions.
Experts warn that if the Strait of Hormuz remains closed or heavily disrupted for a prolonged period, oil prices could rise even further. Some analysts believe prices could reach $150 per barrel if the situation continues until the end of March.
Adnan Mazarei, an economist at the Peterson Institute for International Economics, said the surge in oil prices was expected because production has already been affected in several Gulf countries and the conflict shows signs of continuing.
He said investors are increasingly realizing that the crisis may not end quickly, which is causing greater uncertainty in global energy markets.
Higher oil prices could also increase the cost of several important products derived from crude oil, including jet fuel and key materials used in fertiliser production. This may lead to higher costs for transportation, agriculture and other industries worldwide.
Much of the oil exported from the Gulf region is consumed in Asia, which is why markets in the region have reacted strongly to the crisis.
There are already signs that Asian buyers are turning to alternative supplies. Some liquefied natural gas shipments originally heading to Europe have reportedly changed direction toward Asian markets due to rising demand.
Meanwhile, US President Donald Trump responded to the surge in oil prices by saying the temporary increase was a “small price to pay” for eliminating Iran’s nuclear threat.
The US energy secretary also stated that Israel — not the United States — was responsible for targeting Iran’s energy infrastructure, as concerns grow in the US about rising domestic fuel prices due to the conflict.
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