Oil prices surged in early Monday trading as the military conflict between the United States, Israel, and Iran moved into a high-intensity phase, threatening the stability of the world's most critical energy transit routes.
U.S. benchmark West Texas Intermediate (WTI) jumped as much as 8% to trade near $72.41 per barrel, while international benchmark Brent crude soared over 8% to reach $79.05.
The price action reflects a direct threat to the Strait of Hormuz, the narrow waterway through which roughly one-fifth of global oil and liquefied natural gas (LNG) flows.
Following the death of Iran’s Supreme Leader, reports emerged of attacks on at least two vessels in the strait, leading several major shipping and insurance firms—including Gard and NorthStandard—to suspend war risk coverage for the region.
"This is not an obscure canal. It is the aorta of the global energy system," said Stephen Innes, managing partner at SPI Asset Management. Analysts at RaboResearch echoed the sentiment, noting that energy is a primary input for all global production, meaning a prolonged interruption could trigger a "cascading effect" of rising costs across every major economy.
The market remains particularly focused on the 1.6 million barrels of oil Iran exports daily, the majority of which is destined for China.
While the disruption of these flows would typically force prices significantly higher, Michael Langham of Aberdeen Investments noted that China’s massive strategic reserves—estimated at up to 1.5 billion barrels—and its ability to pivot toward Russian supply might provide a temporary buffer.
While the initial price spike was dramatic, some gains were pared as the session progressed.
Traders noted that the conflict had been partially "priced in" following a weeks-long buildup of U.S. forces in the Middle East.
Furthermore, a pre-planned OPEC+ meeting on Sunday resulted in a modest production increase of 206,000 barrels per day starting in April, providing a small measure of psychological relief to a market bracing for a worst-case scenario of $100-plus oil.