Global oil prices surged above $100 per barrel for the first time in nearly four years as escalating tensions in the Middle East raised fears of prolonged disruptions to global energy supplies.
Both major benchmarks—West Texas Intermediate and Brent Crude—jumped more than 15 percent when markets opened on Sunday evening, reaching levels last seen during the early stages of the Russian invasion of Ukraine (2022).
Despite the spike, Donald Trump dismissed the surge in oil prices as a “small price to pay” in the effort to neutralise Iran’s nuclear threat.
“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 wrote on social media.
Strait of Hormuz Disruption
Energy markets have been rattled by the near shutdown of shipping traffic in the Strait of Hormuz, a critical maritime route through which about 20 percent of the world’s crude oil and natural gas supplies pass.
Since the conflict began on February 28, tanker movements through the strategic waterway have slowed dramatically amid security concerns.
Oil and gas producers across the Gulf region have also begun reducing output, while Israeli strikes on fuel depots in Tehran have heightened fears of retaliatory attacks on energy infrastructure in neighbouring countries.
Impact on Global Markets
The surge in crude prices is already pushing fuel costs higher, particularly in the United States, where rising pump prices are becoming a politically sensitive issue ahead of the November midterm elections.
However, US Energy Secretary Chris Wright sought to reassure markets that supply disruptions would likely be temporary.
“Worst case, that’s a few weeks. That’s not months,” Wright said during television interviews, adding that global oil supply remains strong and that there is no major energy shortage in the Western Hemisphere.
He also revealed that the United States is working with shipping companies to resume tanker traffic through the Gulf, with some vessels potentially receiving direct military protection while passing through the Strait of Hormuz.
Global Supply Concerns
Iran currently accounts for about four percent of global oil production, according to the U.S. Energy Information Administration. Despite international sanctions, a portion of its crude exports—mainly to China—continues to reach global markets.
Meanwhile, Scott Bessent, the US Treasury Secretary, said Washington is also considering measures to stabilise energy markets, including easing restrictions on some Russian oil exports.
In a related move, the U.S. International Development Finance Corporation announced plans to create a $20 billion reinsurance mechanism to help cover risks associated with shipping through the Strait of Hormuz.
Energy analysts warn that if the conflict escalates further or shipping disruptions persist, global oil prices could climb even higher in the coming weeks, adding pressure on already fragile global markets.
