Oil markets opened the week with sharp gains, as prices surged over 20% in early Asian trading on Monday. The escalation of military conflict involving the U.S., Israel, and Iran has deepened investor concerns about potential supply disruptions.
Brent crude for May delivery spiked to $111 a barrel during the early session, the highest level seen since 2022, before easing back to $108. The jump follows intensified hostilities over the weekend, when air strikes targeted Iranian oil facilities in both Tehran and Alborz province—a marked escalation since the conflict began earlier in March. As of Monday, the violence had persisted for ten consecutive days.
President Donald Trump addressed the market reaction, stating on Sunday that the current surge in oil prices is a short-term consequence which would recede once the Iranian nuclear threat is resolved. He characterized elevated prices as a very small price to pay for the US, and World, Safety and Peace.
Since the start of the war, oil benchmarks have climbed over 25%, translating to higher fuel costs worldwide. There have also been reports of Iran conducting strikes against petroleum infrastructure in neighboring nations.
The supply outlook has deteriorated further as Iraq, OPEC’s second-largest producer, has suffered a sharp drop in output. According to industry sources, production from Iraq’s three major southern oilfields has plunged 70% to 1.3 million barrels per day, compared to 4.3 million barrels per day prior to the conflict.
Adding to market pressures, Kuwait, OPEC’s fifth-largest producer, announced precautionary reductions in both its oil and refining operations on Saturday, citing threats from Iran concerning the safety of shipping through the Strait of Hormuz. The Kuwait Petroleum Corporation did not specify the scale of the output cuts.
