Energy prices soared and equity markets faced broad declines on Monday as intensifying hostilities in the Middle East prompted traders to seek safer assets. Oil and gold both climbed sharply amid growing fears that the regional conflict could extend for weeks, fueling volatility in global financial markets.
Brent crude rose by 7.5% to reach $78.34 per barrel, while U.S. West Texas Intermediate advanced 7.3% to $71.88 a barrel. Gold gained more than 2%, climbing to nearly $5,400 an ounce as investors favored traditional safe-haven assets. The heightened risk-off sentiment also led to increased flows into the U.S. dollar and government bonds.
The surge in oil prices followed a series of major airstrikes by U.S. and Israeli forces targeting Iran. The operations resulted in the deaths of Iran’s Supreme Leader Ayatollah Ali Khamenei and several senior officials. The leadership vacuum in the world’s fourth-largest OPEC oil producer has introduced new uncertainty regarding governance and oil supply out of Iran.
Market participants are closely watching for potential disruptions to shipping through the Strait of Hormuz, a critical transit route handling approximately 20% of global oil shipments and a similar portion of liquefied natural gas exports. While the strait remained open as of Monday, marine tracking data indicated that tankers were gathering on both sides, signaling concerns over possible attacks or difficulties in securing insurance for transit.
Tensions intensified as Iran responded to the initial strikes with missile launches throughout the region, raising the specter that neighboring countries could become involved. President Donald Trump told the Daily Mail that the conflict might persist for another four weeks and indicated in a separate post that operations would continue until U.S. objectives had been achieved.
