Global oil prices surged close to $120 per barrel on Monday following Iran’s appointment of Mojtaba Khamenei as its new Supreme Leader, before retreating to around $106.23 per barrel amid heightened fears of prolonged disruptions through the Strait of Hormuz.
Brent crude, the international benchmark, hit an early peak of $119.50 per barrel before easing back to $106.23, while West Texas Intermediate (WTI), the key U.S. benchmark, climbed to $119.48 before settling at $101.25.
The hardline leadership transition in Tehran—announced Sunday by the Assembly of Experts after the killing of Ali Khamenei on February 28 in a U.S.-Israel operation—intensified regional tensions now entering their second week, with Bahrain accusing Iran of targeting a vital desalination plant and Israeli strikes hitting Tehran oil depots overnight.
Around 15 million barrels of crude—roughly 20 percent of global supply—pass daily through the Strait of Hormuz, the narrow waterway bordered by Iran that serves as the main export route for Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the UAE, and Iran itself.
Missile and drone threats have halted many tankers, forcing Gulf producers including Iraq, Kuwait, and the UAE to cut output as storage fills, while attacks on oil and gas infrastructure by Iran, Israel, and the U.S. deepen supply concerns.
U.S. President Donald Trump declared over the weekend he has no interest in negotiating with Iran, stating the conflict ends only if Tehran loses its military and leadership structures, further dimming de-escalation hopes.
Prices dipped slightly on unconfirmed reports of Group of Seven discussions on releasing strategic reserves to stabilise supply, though analysts warn sustained prices above $100 per barrel could strain the global economy.
The energy shock is driving up fuel costs worldwide, hitting import-dependent Asia hardest and fueling inflation that squeezes households and consumer spending—echoing 2022 levels after Russia’s Ukraine invasion.
Stock markets tumbled, with Japan’s Nikkei 225 down 5.2 percent, U.S. futures off 1.5 percent, Friday’s S&P 500 drop of 1.3 percent, Dow plunge of 450 points, and Nasdaq fall of 1.6 percent.
In the U.S., regular gasoline averaged $3.45 per gallon—up 47 cents weekly—while diesel hit $4.60 per gallon, though Energy Secretary Chris Wright predicted prices could dip below $3 soon.
Iranian officials reported four deaths from Israeli strikes on Tehran oil depots and a petroleum facility used for missile fuel, as Parliament Speaker Mohammad Bagher Qalibaf warned of sweeping impacts on global oil.
Tehran exports 1.6 million barrels daily, mostly to China, and any halt could force Beijing to scramble for alternatives, pushing prices higher.
Natural gas prices rose too, hitting $3.33 per 1,000 cubic feet—up 4.6 percent daily and 11 percent weekly—reflecting broader energy market volatility.
