TLDR
- Brent crude along with WTI reached $119.50 per barrel Monday morning before retreating, marking the highest price point since mid-2022.
- Israeli forces targeted Iran’s oil infrastructure during weekend operations, while Iranian forces struck petroleum facilities in Gulf states.
- The Strait of Hormuz faces effective blockade by Iran, disrupting approximately 20% of global oil transport.
- Finance ministers from G7 nations convene Monday to coordinate emergency petroleum reserve deployment.
- Gasoline futures in the U.S. jumped more than 10%, approaching four-year peak levels above $3.00 per gallon.
Global oil markets experienced dramatic price increases Monday following Israeli military operations against Iranian petroleum infrastructure, marking the first such strikes since hostilities commenced in early March. Brent crude alongside West Texas Intermediate futures climbed to an intraday peak of $119.50 per barrel, reaching price levels last observed in mid-2022.
By midday trading hours, Brent settled at $106.80 per barrel while WTI traded at $102.79, retreating from overnight highs. The price adjustment followed Financial Times reporting that G7 finance ministers scheduled an urgent Monday session to evaluate emergency petroleum reserve deployment.
The ministerial meeting will involve coordination efforts with the International Energy Agency. Three G7 member nations, the United States among them, have publicly endorsed collaborative reserve releases.
Oil markets had already climbed more than 25% since the Iran situation intensified in early March. Weekend military escalations drove prices higher as trading commenced Sunday evening.
Israeli forces targeted fuel storage complexes in Tehran on Saturday. Iranian military responses included drone strikes against a Bahrain oil refinery, the Wall Street Journal confirmed.
Strait of Hormuz Now Effectively Blocked
Iranian forces expanded operations to target vessels transiting the Strait of Hormuz. This critical waterway facilitates roughly 20% of worldwide oil consumption, with current traffic levels described as severely diminished.
OCBC analysts noted that “tail risks from a sustained Hormuz stoppage remain in play,” drawing parallels to the energy crisis magnitude experienced during the 2022 Russia-Ukraine conflict.
Deutsche Bank strategist Jim Reid indicated the G7 reserve deployment could provide relief, though emphasized “the duration and intensity of the conflict will still be far and away the most important driver.”
Kuwait and the UAE both announced oil output reductions over the weekend, following Iraq’s production cuts from the prior week. Storage capacity limitations linked to supply chain disruptions are compelling several producers to reduce output.
Saudi Arabia took the unusual step of offering crude through spot markets, signaling efforts to address supply shortfalls resulting from the regional conflict.
Trump Warns Prices Will Stay High Short-Term
President Donald Trump addressed the oil price surge Sunday. He projected prices would remain elevated during the immediate period ahead but would “drop rapidly” following resolution of the Iran conflict.
Trump had earlier minimized concerns about rising U.S. gasoline costs, informing Reuters that military operations against Iran represented his primary focus.
U.S. gasoline futures advanced more than 10% Monday, surpassing $3.00 per gallon and approaching their strongest levels since mid-2022.
Jefferies economist Mohit Kumar characterized the Iranian oil infrastructure attacks as evidence “suggesting a shift in war strategy,” cautioning that critical infrastructure targeting elevates both civilian impact and economic consequences.
OCBC analysts projected that under a moderately severe scenario where limited flows resume with military escort protection, Brent could sustain levels near $100 per barrel through the middle of the year.
