Agency Report
Global oil prices climbed above $100 per barrel on Monday as escalating hostilities involving Iran rattled energy markets and triggered declines across most Asian stock markets, raising fears of a broader economic shock.
The surge comes as the conflict involving Iran enters its third week, with no clear signs of de-escalation and growing concerns over disruptions to oil shipments through the strategically vital Strait of Hormuz.
The narrow waterway — through which roughly a fifth of the world’s oil supply passes — has effectively been shut since the start of military operations on February 28, intensifying worries about global energy supply.
Crude prices spiked early Monday after Donald Trump said at the weekend that US forces had struck military targets on Kharg Island, a key Iranian oil export hub in the Persian Gulf.
The island handles the vast majority of Iran’s crude exports, making it a critical node in the country’s energy infrastructure.
However, Iran’s semi-official Fars News Agency later reported that the strikes caused no damage to oil facilities.
Trump also warned that attacks could extend to energy infrastructure if Tehran interferes with maritime traffic through the Strait of Hormuz. He urged major oil-importing countries — including China, France, Japan, South Korea and the United Kingdom — to deploy naval forces to safeguard the shipping lane.
“This should have always been a team effort, and now it will be,” Trump said in a post on his Truth Social platform.
But some nations quickly signalled reluctance to commit military resources. Japan said it was not currently considering a maritime security operation, while Australia announced it would not send naval vessels to the region.
Iran rejects talks with US
Despite Trump’s claim that Tehran was seeking negotiations to end the conflict, Iran’s Foreign Minister, Abbas Araghchi, dismissed the suggestion and ruled out talks with Washington.
“We don’t see any reason why we should talk with Americans, because we were talking with them when they decided to attack us,” Araghchi said in an interview with CBS News programme ‘Face The Nation’.
He insisted Iran had not requested a ceasefire or negotiations, although he indicated Tehran was willing to engage with countries seeking assurances for the safe passage of their vessels through the Gulf.
Drone attacks and regional disruptions
Military exchanges continued on Monday, with Saudi Arabia reporting that it intercepted more than 60 drones overnight.
Meanwhile, operations at Dubai International Airport were briefly suspended after a drone-related incident triggered a fire near the facility.
Araghchi also condemned Israeli strikes on fuel depots in Tehran, describing them as “ecocide” due to the potential long-term environmental and health consequences.
Markets rattled by energy fears
Oil markets reacted sharply to the ongoing uncertainty.
Brent North Sea crude rose nearly three per cent to as high as $106.50 per barrel before easing slightly to around $104, while West Texas Intermediate climbed more than two per cent to above $100.
The spike came even as the International Energy Agency (IEA) moved to stabilise markets. Member countries last week agreed to release a record 400 million barrels of strategic oil reserves to ease supply pressures, with initial releases beginning in Asia and Oceania.
Japan confirmed on Monday that it had begun releasing oil from its emergency reserves.
Global markets under pressure
Equity markets across Asia remained fragile as investors weighed the economic implications of a prolonged conflict and potential energy shock.
Major indices in Tokyo, Shanghai, Sydney, Wellington, Taipei, Manila, Mumbai, Bangkok and Jakarta all closed lower.
However, markets in Hong Kong, Seoul and Singapore posted gains, while European bourses in London, Frankfurt and Paris opened higher.
Analysts warn that the duration of disruptions in the Strait of Hormuz will be critical to the global economic outlook.
“The impact of geopolitical events on markets hinges more on when transits through the Strait of Hormuz begin to normalise than when hostilities end,” said Michael Brown, a strategist at Pepperstone.
“The longer the strait remains impassable, the tighter commodity supply will become and the greater the inflationary pressure on the global economy.”
Adding to the uncertainty, fresh data showed the United States economy grew by just 0.7 per cent in the fourth quarter, significantly slower than the earlier estimate of 1.4 per cent.
Investors are also closely watching policy meetings this week at major central banks, including the Federal Reserve, the Bank of England and the European Central Bank, for signals on how the conflict could influence monetary policy.