Oil and Gas Prices Surge as Markets Slide After U.S.–Israel Strikes on Iran

Oil and gas prices surged while stock markets declined across Asia on Monday after U.S.-Israeli military action against Iran heightened fears of a prolonged conflict in the energy-rich Middle East.

Benchmark crude prices jumped sharply at the start of trading, with Brent crude briefly rising nearly 14 per cent and West Texas Intermediate gaining close to 12 per cent. The surge followed strikes on Iran that reportedly killed Supreme Leader Ali Khamenei and several senior officials.

Market anxiety was further fuelled by disruptions around the Strait of Hormuz, a critical waterway that carries about 20 per cent of the world’s seaborne oil. The strait was effectively rendered inaccessible, with reports of multiple vessels coming under attack, intensifying concerns over global energy supply.

Asian equity markets fell broadly, with sharp losses recorded in Tokyo, Hong Kong, Singapore, Mumbai, Bangkok, Wellington and Taipei. U.S. futures dropped more than one per cent, while Shanghai bucked the trend with modest gains and Sydney traded flat.

European markets also opened lower, with London down one per cent and Frankfurt and Paris shedding more than two per cent each.
Airline stocks were among the hardest hit as carriers cancelled flights to the region. Shares in Cathay Pacific, Qantas and Singapore Airlines fell sharply, while Japan’s ANA and JAL declined by more than five per cent.

In contrast, energy stocks rallied strongly. Shares of Australia’s Woodside Energy and Santos climbed more than six per cent, while PetroChina advanced in Hong Kong and Japan’s Inpex posted solid gains.

Safe-haven assets benefited from the turmoil, with gold rising about two per cent and the U.S. dollar strengthening. Although crude prices later eased from their intraday highs, they remained more than nine per cent higher, while European gas prices surged by over 20 per cent.

Oil markets had already been on edge in recent days amid speculation that Donald Trump might authorize military action after talks aimed at curbing Iran’s nuclear programme stalled.

Analysts warned that sustained high oil prices could complicate global inflation dynamics. Saxo Markets strategist Charu Chanana said persistently elevated energy costs could slow progress on inflation and make central banks, including the U.S. Federal Reserve, more cautious about cutting interest rates.

Trump later urged Iranians to oppose their government and said the conflict could last several weeks. Iran’s Supreme National Security Council, however, said the country would not enter negotiations with the United States and denied reports that talks had been sought.

Meanwhile, Iran continued missile and drone operations in the Gulf, raising fears of a wider regional escalation. Israeli strikes were reported in Lebanon after Iran-backed Hezbollah fired rockets into Israel in response to Khamenei’s death.

Although Tehran has not formally closed the Strait of Hormuz, Iran’s Revolutionary Guards warned vessels against transiting the route. British maritime authorities said at least two ships were hit near the coasts of Oman and the UAE, while Iranian state television reported that an oil tanker had been struck and was sinking after attempting to pass through the strait.

Energy analysts cautioned that shipping disruptions could push crude prices significantly higher. Amena Bakr of Kpler said insurance costs would likely become prohibitive, potentially driving oil prices toward $90 per barrel, with prices above $100 not ruled out if disruptions persist.

Major shipping companies have already begun suspending transit through the strait. While oil-importing nations hold strategic reserves, analysts warned that prolonged disruption would overwhelm available.

Gas prices also spiked, adding to economic pressure, as Qatar plays a key role in global liquefied natural gas supply. Economists warned that rising energy and transport costs could weigh heavily on global growth if the crisis drags on.