LONDON/SINGAPORE — Global oil prices surged more than 6% on Saturday, with Brent crude touching $98.40 per barrel — the highest level since October 2023 — following Israeli airstrikes on an Iranian Revolutionary Guard facility near Qom. West Texas Intermediate (WTI) crude climbed to $94.20, extending weekly gains to nearly 9%.
The sharp rally reflects growing fears that the escalating Israel-Iran conflict could disrupt crude supplies from the Strait of Hormuz, through which approximately 20% of global oil passes daily. Traders priced in a rising geopolitical risk premium as Iran threatened "proportional retaliation" and the US moved additional naval assets to the region.
Why the Strait of Hormuz matters
Iran has previously threatened to block the strait — a narrow passage between Oman and Iran — in response to military action. Any disruption, even temporary, could send oil prices skyrocketing above $120 per barrel, according to analysts at Goldman Sachs. "Markets are now pricing in a 35% probability of a supply disruption within the next three months," said energy strategist Helima Croft. "If Iran directly retaliates against tanker traffic, we could see triple-digit oil quickly."
Asian markets tumble; safe-haven assets rally
Equity markets across Asia fell sharply, with Japan's Nikkei 225 dropping 2.3% and India's Sensex sliding 1.8% in early trade. Investors rotated into traditional safe havens: gold surged past $2,450 per ounce for the first time since 2024, while the Swiss franc and US Treasury bonds saw strong buying.
The Indian rupee weakened to 84.2 against the US dollar, reflecting concerns over the country's heavy reliance on crude imports. "Every $10 increase in oil prices adds roughly 0.4% to India's inflation and widens the current account deficit," noted a finance ministry official speaking on condition of anonymity.
What happens next?
Energy analysts are closely watching two factors: whether Iran retaliates directly against energy infrastructure, and whether OPEC+ intervenes. The cartel, led by Saudi Arabia and Russia, has about 4 million barrels per day of spare capacity. However, any release would likely be symbolic unless actual supply is lost.
The White House confirmed it is in contact with major producers to stabilize markets. "We are monitoring the situation closely and are prepared to use all tools at our disposal," a National Security Council spokesperson said. For now, consumers face rising fuel prices — US gasoline futures jumped 5% — adding to global inflationary pressures.
This story is developing. Check back for updates on oil volatility and geopolitical developments.