Global oil prices climbed sharply on Monday after fresh attacks in the Gulf intensified fears of supply disruptions, adding pressure to financial markets already unsettled by rising bond yields and escalating geopolitical tensions.
Brent crude futures gained 1.2% to reach $110.63 per barrel, while US West Texas Intermediate crude rose 1.0% to $106.42 per barrel. The increase followed reports of a drone strike that caused a fire at a nuclear power facility in the United Arab Emirates, while Saudi Arabia confirmed intercepting three drones targeting the Kingdom.
Meanwhile, US President Donald Trump warned that Iran must move “fast” to secure a diplomatic agreement, further heightening concerns over regional stability and energy security.
Market anxiety also intensified over the Strait of Hormuz, a critical global shipping route that handles nearly 20% of the world’s oil trade. Shipping disruptions in the area and reports that Tehran seeks tighter control over the strategic waterway increased fears of prolonged supply constraints.
Analysts at Capital Economics warned that continued disruption could rapidly deplete global oil inventories by the end of June. They projected Brent crude prices could rise to between $130 and $140 per barrel if tensions escalate further. Moreover, analysts cautioned that an extended closure of the Strait of Hormuz through the end of the year could push oil prices near $150 per barrel by 2027 and trigger higher inflation and a possible global recession.
Rising energy costs also affected financial markets, with US Treasury yields climbing sharply and stock markets across Asia recording losses. Investors remained cautious ahead of meetings by G7 finance ministers in Paris, where discussions are expected to focus on Gulf security concerns and global supply chains.
Meanwhile, gold prices remained relatively stable despite heightened geopolitical uncertainty and continued volatility in global markets.
