Oil prices surged toward $120 a barrel on Monday, the highest level since mid-2022, as the escalating war involving Iran disrupted Middle Eastern energy supplies and rattled global financial markets.
Brent crude climbed to as high as $119.50 a barrel, while U.S. West Texas Intermediate (WTI) briefly touched $119.48, putting both benchmarks on track for one of their largest one-day gains on record.
The rally was driven by fears of prolonged supply disruptions and concerns that shipments through the Strait of Hormuz, a chokepoint that carries roughly a fifth of global oil consumption, could remain constrained.
The sharp move in energy markets reverberated across other asset classes. Agricultural commodities rallied, led by vegetable oils, while gold fell and the U.S. dollar strengthened as investors reassessed inflation risks and the outlook for interest-rate cuts.
“The violent reaction stems from the markets seeing no obvious offramp in the escalating Middle East conflict,” Tony Sycamore, a market analyst at IG, said in a note. “The risk of more lasting economic damage continues to build by the day.”
The latest surge in crude followed reports that some major Gulf producers had begun curbing output amid logistical constraints and storage pressures linked to the conflict. Analysts at ING said oil production had started to shut in, with Iraq, Kuwait and the United Arab Emirates among producers reducing supply.
In agricultural markets, the energy rally pushed biofuel-linked crops higher. Malaysian palm oil jumped about 9%, while Chicago soybean oil rose to its highest level since late 2022. Grain prices also strengthened, with wheat climbing to its highest level since June 2024 and corn reaching a 10-month high.
Gold, however, fell more than 2% as a stronger dollar weighed on bullion prices. The U.S. currency hovered near a three-month high, making dollar-denominated commodities more expensive for overseas buyers. Rising oil prices also fueled concerns about renewed inflation, reducing expectations for near-term interest-rate cuts.
In metals markets, aluminium surged to a four-year high as supply risks mounted in the Middle East. Three-month aluminium on the London Metal Exchange rose to $3,544 per ton, the highest level since March 2022.
Regional producers have already begun declaring force majeure on shipments. Qatari smelter Qatalum and Aluminium Bahrain said deliveries could be affected as tensions escalate.
