Oil surges and stock futures sink as war in Iran threatens crude supply
Following weekend strikes by the United States and Israel on Iran, oil futures rose sharply Monday, while stock market indicators dipped. US crude climbed 7.5%, and Brent crude, the global standard, surged 6.2% to hit approximately $77 per barrel, briefly exceeding $82 during the session. The price increase was already anticipated before the attacks, as markets braced for potential disruptions.
Meanwhile, stock futures for the S&P 500, Nasdaq, and Dow all declined over 1%. However, shares of Exxon and Chevron climbed pre-market, as higher oil prices typically benefit energy firms. Defense stocks, such as Northrop Grumman and Lockheed Martin, also gained traction.
Visualizing the US-Israeli attack on Iran and retaliation in maps and charts
Market participants anticipate the ongoing oil market disruption… might be short-lived. Yet, uncertainty persists regarding the conflict’s duration and scale, with some analysts suggesting it could extend for weeks. Scenarios like large-scale unrest, a power vacuum, or attacks on production facilities could push oil prices beyond $100 per barrel, according to industry experts.
“Elevated global benchmark prices… are expected to be sustained until the Strait is passable,” noted Jorge Leon, Rystad Energy’s head of geopolitical analysis.
OPEC and its allies, OPEC+, announced a supply boost of 206,000 barrels daily after halting incremental increases earlier this year. While this addition may temper price gains, analysts warn it won’t fully offset a major oil flow disruption.
Asian economies, including China and India, face heightened vulnerability if the Strait of Hormuz is blocked. Their efforts to secure oil from alternative sources could drive global prices upward. Even partial disruptions, such as Iranian exports being affected, would ripple through international markets.
“A loss of Iranian barrels would cause China to bid for substitute supplies,” said Clayton Seigle, a senior fellow at the Center for Strategic and International Relations.
Experts highlight the Strait of Hormuz as a critical chokepoint, handling about 20 million barrels daily—nearly a fifth of global production. Iran controls the northern section, and the region saw tanker attacks over the weekend, prompting vessels to avoid the route. This cautious behavior has already created a de facto halt in traffic, per Leon.
More concerning than a strait closure would be a prolonged shutdown of Saudi Arabia’s oil infrastructure. Bob McNally, president of Rapidan Energy Group, emphasized that the Abqaiq plant, damaged in 2019, requires specialized equipment not easily sourced.
