Global oil prices surged toward $120 per barrel on Monday, marking the highest level since mid-2022, as the escalating conflict involving Iran disrupted energy supplies across the Middle East and shook global financial markets.
Benchmark Brent Crude climbed as high as $119.50 per barrel, while West Texas Intermediate briefly touched $119.48, putting both benchmarks on course for one of their largest single-day gains in recent years.
The surge was largely driven by fears of prolonged supply disruptions and growing concerns that shipments through the Strait of Hormuz—a vital shipping route that carries roughly one-fifth of global oil consumption—could remain restricted if tensions continue to escalate.
The sharp rally in energy markets quickly spread to other asset classes. Agricultural commodities moved higher, led by vegetable oils, while investors reassessed inflation risks and the outlook for global interest rates.
“The violent reaction stems from the markets seeing no obvious offramp in the escalating Middle East conflict,” said Tony Sycamore, a market analyst at IG Group. He warned that the risk of deeper economic damage is rising as the crisis continues.
The jump in crude prices also followed reports that several Gulf producers had begun reducing output due to logistical challenges and storage pressures linked to the conflict. Analysts at ING Group indicated that oil production had started shutting in across several regional producers.
Among the countries reportedly cutting supply are Iraq, Kuwait, and the United Arab Emirates, adding further pressure to already strained global markets.
In agricultural markets, the energy rally lifted biofuel-linked crops. Palm Oil in Malaysia jumped around 9%, while Soybean Oil in Chicago reached its highest level since late 2022. Grain markets also strengthened, with Wheat rising to its highest level since June 2024 and Corn hitting a 10-month high.
Meanwhile, Gold prices dropped more than 2% as a stronger U.S. Dollar weighed on bullion markets. The dollar hovered near a three-month high, making commodities priced in dollars more expensive for overseas buyers.
The surge in oil also heightened fears of renewed global inflation, reducing expectations that central banks may cut interest rates in the near term.
Industrial metals were also affected. Aluminium surged to a four-year high, with three-month contracts on the London Metal Exchange rising to $3,544 per ton, the highest level since March 2022.
Regional producers have already begun declaring force majeure on shipments. Companies such as Qatalum and Aluminium Bahrain warned that deliveries could be disrupted if tensions in the Middle East continue to escalate.
