Oil prices have surged past $100 a barrel amid the fallout of the United States and Israel’s war on Iran.
Brent crude, the global benchmark, rose by as much as 20 percent on Sunday, topping $111 a barrel, as fears grew of prolonged disruption to global energy supplies.
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The surge marked the first time oil rose above $100 per barrel since Russia’s 2022 invasion of Ukraine.
US President Donald Trump, who campaigned heavily on cost-of-living concerns in the 2024 election, brushed off the surge.
“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace,” Trump said in a post on Truth Social.
“ONLY FOOLS WOULD THINK DIFFERENTLY!”
US Energy Secretary Chris Wright also down played the prospect of rising energy prices on Sunday, telling CBS News’ “Face the Nation” that any increase in prices at the petrol pump would be “temporary.”
Crude oil prices have surged by about 50 percent since the US and Israel launched joint strikes on Iran on February 28.
Iran has brought shipping in the Strait of Hormuz to an effective halt in retaliation, threatening about one-fifth of the global oil supply.
Iraq, the United Arab Emirates and Kuwait, three of the biggest producers in The Organization of the Petroleum Exporting Countries (OPEC), have cut production as barrels accumulate with no where to go due to the effective closure of the waterway.
Attacks on energy production facilities in the region have further threatened supplies.
Iran has been blamed for multiple attacks on energy facilities across the Gulf, including in Qatar, Saudi Arabia and Kuwait.
On Saturday, Israel carried out air strikes targeting Iran’s oil infrastructure for the first time since the start of the war.
The strikes hit four oil storage facilities and an oil production transfer centre in Tehran and the province of Alborz, according to Iranian state media.
Iran’s Revolutionary Guards (IRGC) on Sunday threatened to target energy facilities across the region in retaliation, warning that oil could soar to $200 a barrel if the US and Israel “continue this game.”
Stocks in Asia fell sharply on Monday morning, as investors braced for the fallout of rising energy prices.
Japan’s Nikkei 225 tumbled more than 7 percent in early trading, while South Korea’s KOSPI plunged more than 8 percent.
In Hong Kong, the Hang Seng Index fell nearly 3 percent.
US stock futures, which are traded outside regular market hours, also saw substantial losses.
Futures tied to Wall Street’s benchmark S&P 500 were down by 1.7 percent, while those for the tech-heavy Nasdaq Composite fell by 1.90 percent.
While Trump administration officials have insisted that the war will be over within weeks, the prospect of prolonged disruption to global energy supplies has raised fears of higher inflation and sluggish economic growth.
The International Monetary Fund estimates that every 10 percent rise in oil prices, if sustained, corresponds with a 0.4 percent rise in inflation and a 0.15 percent reduction in global economic growth.
In an interview published by The Financial Times on Friday, Qatar’s energy minister Saad al-Kaabi warned that all of the region’s producers could soon be forced to halt production and that prices could hit $150 a barrel.
“Everybody that has not called for force majeure we expect will do so in the next few days that this continues,” Al-Kaabi told the newspaper.
“All exporters in the Gulf region will have to call force majeure.”
