Oil prices jump to $111/barrel as Iran war sparks heightened supply fears

Oil prices jumped over 20% in early Asian trade on Monday, reaching levels last seen in 2022 as the growing war between the U.S., Israel, and Iran sparked heightened concerns over supply disruptions in the coming months.

Brent oil futures for May surged over 20% in early trade to a peak of $111.04 a barrel, before cooling some gains to trade at $107.92 a barrel by 18:08 ET (23:08 GMT).

The U.S.-Israel conflict with Iran escalated over the weekend after air strikes hit Iran’s oil facilities in Tehran and the province of Alborz– a first since the conflict began in early-March. The conflict entered its tenth consecutive day on Monday.

Earlier, Iran began attacking ships passing through the Strait of Hormuz, a key shipping lane for roughly 20% of the world’s oil consumption. Disruptions in the lane had been a key source of concern for oil markets.

U.S. President Donald Trump acknowledged the jump in oil prices on Sunday, stating that high 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.”

Oil prices have soared more than 25% since the onset of the war, causing sharp increases in fuel prices across the globe. Iran was also seen attacking oil infrastructure in surrounding Middle Eastern countries.

“The situation exceeds even the worst-case scenario we envisage before the initial attacks on Iran by US and Israel military forces. The likelihood of further gains in oil prices is high,” ANZ analysts said in a note.

Major middle eastern producers, such as the United Arab Emirates and Kuwait, have begun reducing oil production, as storage runs out due to widespread supply disruptions.

Oil was little soothed by Trump promising maritime insurance and potential navy protection for ships passing through the Strait of Hormuz.