Global oil prices face a record surge of more than 15% to their highest levels since mid-2022, as some producers have cut supplies. Fears of prolonged shipping disruptions have gripped the market due to the expanding U.S.-Israeli conflict with Iran.
Energy markets are particularly concerned due to the proximity of the crisis to the Strait of Hormuz, through which roughly one-fifth of the world's oil supply normally passes.
Brent crude futures LCOc1 were up by $24.96 or 27% at $117.96 per barrel—on track for the biggest-ever jump in a single day, while U.S. West Texas Intermediate (WTI) crude CLc1 futures were up by $25.72 or 28.3% to $116.62.
WTI surged 31.4% to a session high of $119.48 a barrel earlier on Monday, while Brent rose as much as 29% to $119.50 a barrel. Before Monday's surge, Brent had already risen 27% and WTI 35.6% last week.
Prices pared gains after the Financial Times reported that the Group of Seven (G7) finance ministers and the International Energy Agency will discuss a joint emergency oil reserves release on Monday. Saudi Aramco also offered a prompt crude supply through a series of rare tenders.
Another factor that has led to the price hike is the appointment of Mojtaba Khamanei to succeed his father as Iranian Supreme Leader, a signal that hardliners will remain firmly in charge of Tehran
Disruptions in tanker movements and rising security risks have already slowed shipping activity, leaving Asian buyers especially vulnerable given their heavy reliance on West Asian crude oil.
The war could leave consumers and businesses worldwide facing weeks or months of higher fuel prices even if the conflict ends quickly, as suppliers grapple with damaged facilities, disrupted logistics, and elevated risks to shipping.
U.S. Senate Democratic Leader Chuck Schumer called on Trump to release oil from the Strategic Petroleum Reserve.
'President Trump should release oil from the SPR now to stabilise markets, bring prices down, and stop the price shock that American families are already feeling thanks to his reckless war,' Schumer said in a statement.
Iraq and Kuwait have been cutting oil output, adding to the liquefied natural gas reductions from Qatar. Analysts expect the United Arab Emirates and Saudi Arabia will also have to cut output soon due to running out of oil storage.
Iraqi oil production from its main southern oilfields has dropped by 70%, with an output of only 1.3 million barrels a day as the country is no longer able to export oil via the Strait of Hormuz, according to three industry sources. Crude storage has also reached maximum capacity, said an official with the state-run Basra Oil Company.
Kuwait Petroleum Corporation began cutting oil output on Saturday and declared a force majeure on shipments, though it has not disclosed how much production will be shut.
Iran, meanwhile, has continued targeting oil infrastructure across West Asia. Fujairah Media Office reported that fires broke out in the UAE's Fujairah oil industry zone due to falling debris. Saudi Arabia's Defence Ministry stated on X that it intercepted a drone heading to the Shaybah oilfield.
(With inputs from Reuters)