Global markets were rattled on Monday as oil prices soared nearly 25% to their highest levels since mid-2022, with Brent crude heading for a record one-day gain. The spike, driven by escalating conflict between Iran, the United States, and Israel, sent ripple effects through commodities, currencies, and metals.
Gold fell over 2%, pressured by a stronger dollar and growing concerns that higher energy costs will stoke inflation, reducing the likelihood of near-term interest-rate cuts.
Brent crude futures climbed to $119.50 per barrel, while U.S. West Texas Intermediate (WTI) reached $119.48. Analysts noted supply reductions from Iraq, Kuwait, and the UAE, combined with potential shipping disruptions through the Strait of Hormuz, as key factors behind the surge, according to Reuters.
ING analysts observed, “Upstream oil production has started to shut in, with producers facing storage constraints. The situation appears to be deteriorating further.”
Agricultural commodities followed oil’s lead. Malaysian palm oil jumped 9%, Chicago soybean oil reached its highest level since late 2022, wheat climbed to levels not seen since June 2024, and corn prices hit a 10-month high. Analysts attributed these gains to the extensive use of vegetable oils in biofuels.
Aluminium surged to a four-year high at $3,544 per ton on the London Metal Exchange, driven by disruptions in the Middle East. Qatari smelter Qatalum and Aluminium Bahrain (ALBH.BH) have declared force majeure on shipments, underscoring supply concerns. Other metals faced headwinds from a stronger U.S. dollar.
Tony Sycamore, market analyst at IG, noted, “The violent reaction stems from the markets seeing no obvious offramp in the escalating Middle East conflict, now a high-stakes standoff where neither side appears willing to blink first. The risk of more lasting economic damage continues to build by the day.”
Iran intensified tensions by naming Mojtaba Khamenei as successor to Supreme Leader Ali Khamenei, signaling that hardliners remain firmly in control in Tehran a week into the conflict.
With inflation fears mounting and rate-cut expectations fading, investors are bracing for further volatility as geopolitical risks continue to weigh heavily on global markets.
