Oil Surges Above $80 as Middle East Tensions Disrupt Strait of Hormuz and Global Markets

Oil prices surged above $80 per barrel and Asian stocks fell as Middle East tensions rose following US and Israeli strikes on Iran that killed Supreme Leader Ayatollah Ali Khamenei. The Strait of Hormuz is effectively disrupted, with ships attacked off Oman and the UAE, raising fears of global oil supply shortages. Iran’s missile and drone strikes killed four people and injured dozens. Gold rose as a safe haven, while analysts warn prolonged disruption could push oil above $100, raising inflation and hurting growth, especially in transport, shipping, and tourism sectors.

Oil prices surged sharply and stock markets in Asia declined on Monday as tensions in the Middle East escalated following US and Israeli military strikes on Iran, which resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei. The strikes and subsequent retaliatory actions have disrupted the vital Strait of Hormuz, one of the world’s most important oil shipping lanes, and have led to attacks on several commercial vessels navigating the area.
In early Asian trade, Brent Crude, the international benchmark for oil, spiked to just over $80 per barrel, up from $72.87 at the close of trading on Friday. Prices later eased slightly, trading below $79, but the volatility reflects heightened fears over supply disruptions. Stock markets reacted sharply to the unrest, with Japan’s Nikkei falling 2.2 percent in early trading, while Sydney’s index dropped by 0.5 percent. Meanwhile, gold, often considered a safe haven during times of geopolitical uncertainty, rose by approximately two percent as investors sought security amidst the instability.
The spike in oil prices comes after the start of the US and Israeli strikes on Saturday, which targeted Iranian infrastructure and military assets. Following these attacks, Iran launched a retaliatory campaign involving ballistic missiles and drones across the Gulf region. According to the UAE foreign ministry, these strikes resulted in four fatalities and numerous injuries. While Iran has not formally closed the Strait of Hormuz — a critical passage through which roughly 20 percent of global seaborne oil flows — its Revolutionary Guards have issued strong warnings against transiting the waterway.
Over the weekend, at least two ships were struck, one near Oman’s coast and another off the UAE, according to the British maritime security agency, UKMTO. Iranian state television reported that an oil tanker was hit and began sinking after allegedly trying to “illegally” pass through the strait. These incidents, coupled with rising insurance costs for vessels navigating the region, are expected to further elevate global oil prices. Amena Bakr, head of Middle East and OPEC+ research at Kpler, projected that prices could reach $90 per barrel if the blockade or disruption persists. Major shipping companies have already confirmed suspending fleet operations through the strait until the situation stabilizes.
Analysts warn that the disruption of the Strait of Hormuz could result in the loss of 8 to 10 million barrels per day of crude oil supply, significantly impacting global markets. While countries with oil reserves, particularly OECD members, maintain stocks equivalent to approximately 90 days of consumption, the scale of potential shortages means that oil prices above $100 per barrel cannot be ruled out if the crisis continues. Michelle Brouhard, another analyst at Kpler, described the spike in oil prices as a potential “Achilles heel” for US President Donald Trump, as Iran may aim to keep prices high to pressure the US politically, particularly ahead of upcoming mid-term elections.
The crisis is also expected to affect gas prices, particularly because Qatar, a major exporter of liquefied natural gas, could see disruptions in exports. Rising energy costs, including fuel and shipping expenses, may contribute to inflationary pressures globally. Eric Dor, an economist at the IESEG School of Management in Paris, warned that sustained high energy prices could negatively impact economic growth. While short-term spikes might not have severe consequences, prolonged disruptions could have a recessionary effect, driving up costs for air transport, maritime shipping, and tourism sectors, which are particularly vulnerable to rising fuel and operational costs.
While some sectors, such as defence, could benefit from the current crisis, Dor predicts overall declines in share prices, particularly for industries heavily dependent on fuel and logistics. The combination of geopolitical uncertainty, rising commodity prices, and disrupted global supply chains highlights the broad economic impact of the Middle East conflict and the delicate balance facing markets in the region.