Global oil prices have climbed past $110 (£82.74) per barrel, while stock markets have declined as the growing US-Israeli conflict with Iran raises concerns about long-term disruption to oil shipments through the Strait of Hormuz.
On Sunday, Mojtaba Khamenei was named as the successor to his father, Ali Khamenei, as Iran’s Supreme Leader, suggesting that hardline leadership remains firmly in control a week after the conflict began.
Over the weekend, the United States and Israel carried out fresh airstrikes across Iran, hitting several targets including oil storage facilities.
Any major disruption to energy supplies from the region could drive up fuel costs for consumers and businesses worldwide.
During Monday morning trading in Asia, Brent crude oil rose nearly 24% to $114.74 per barrel, while Nymex light sweet crude increased by more than 26% to $114.78.
Stock markets across the Asia-Pacific region dropped sharply. Japan’s Nikkei 225 fell by more than 7%, Hong Kong’s Hang Seng Index declined by over 3%, and Australia’s S&P/ASX 200 slipped by more than 4%.
In South Korea, the Kospi Index dropped by more than 8%, triggering a 20-minute halt in trading as a circuit breaker mechanism was activated to prevent panic selling.
Roughly 20% of the world’s oil supply normally passes through the Strait of Hormuz, but traffic through the narrow route has almost stopped since the conflict began.
Markets had earlier expected oil to reach about $100 per barrel, but prices rose much faster than predicted during early Asian trading.
Analysts now warn that if the Strait remains closed for an extended period, oil prices could climb above $150 per barrel.
Adnan Mazarei of the Peterson Institute for International Economics said the surge in oil prices was not surprising, noting that production has already been disrupted in parts of the Gulf and the conflict appears likely to continue.
Donald Trump, the President of the United States, described the short-term rise in oil prices as a “small price to pay” for addressing Iran’s nuclear threat.