Oil markets registered a dramatic move higher in early Asian trading as the conflict between the U.S., Israel and Iran escalated over the weekend. Brent futures for May jumped more than 20% at the session peak, hitting $111.04 a barrel, before trimming some gains to trade at $107.92 a barrel by 18:08 ET (23:08 GMT).
Market participants cited heightened concerns about potential supply disruptions in the months ahead after air strikes struck Iran’s oil facilities in Tehran and the province of Alborz - reported as a first since hostilities began in early-March. The wider confrontation had entered its tenth consecutive day on Monday.
Earlier in the conflict, Iranian forces began attacking ships passing through the Strait of Hormuz, a critical shipping lane that handles roughly 20% of global oil consumption. Disruptions in transit through that chokepoint were already a central source of market anxiety.
U.S. President Donald Trump publicly acknowledged the surge in oil prices on Sunday, saying that high oil prices "will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace." Oil benchmark levels have increased steeply since the beginning of the war, with prices up by more than 25% since the onset of the conflict, contributing to sharp rises in fuel costs across the globe.
Reports from the region indicate that Iran has also been seen attacking oil infrastructure in neighboring Middle Eastern countries, further reinforcing concerns about the resilience of physical supply networks. In a note referenced by market participants, ANZ analysts stated: "The situation exceeds even the worst-case scenario we envisage before the initial attacks on Iran by US and Israel military forces. The likelihood of further gains in oil prices is high."
Compounding the supply picture, some major Middle Eastern producers - including the United Arab Emirates and Kuwait - have begun reducing oil output as available storage capacity has filled amid widespread disruptions. Those production adjustments reflect logistical strain as markets seek alternatives for displaced barrels.
Measures intended to reassure shipping interests, such as promises of maritime insurance and potential navy protection for vessels transiting the Strait of Hormuz, were reported but did little to alleviate market moves. Oil traders and end users remain sensitive to the possibility that continued military action could further tighten flows and lift prices.
Context limitations - The material above reflects reported market moves, public comments and analysts' notes tied to the current conflict. It does not introduce additional events, dates or projections beyond those referenced.