Oil, markets roiled by Iran-Gulf conflict

Oil prices stayed elevated and volatile on Monday as the U.S.-Israeli war against Iran entered its third week and shipping through the Strait of Hormuz remained largely blocked. Brent crude (UKOIL) traded near $104–$105 a barrel, up more than 40% since the conflict began on February 28, while U.S. benchmark crude was close to $100.

Analysts noted that Iran has effectively stopped cargo traffic through the narrow waterway, where about a fifth of the world’s oil typically sails. In just over a week since the strait’s closure, more than 12 million barrels of oil equivalent per day have been taken offline, according to Rystad Energy.

The disruption has forced some producers to cut output because their crude has nowhere to go. While a handful of tankers have reportedly passed through the strait, market participants described trading conditions as being “in the fog” amid conflicting reports over actual flows.

Regional energy and transport infrastructure has come under repeated fire. Iran has launched hundreds of missiles and drones at Gulf countries hosting U.S. forces, targeting energy facilities and airports. The United Arab Emirates reported four ballistic missiles and multiple drones intercepted, while Saudi Arabia said it downed dozens of drones over its eastern oil region.

Dubai International Airport, the world’s busiest for international travel, suspended operations after a drone struck a fuel tank and caused a fire, though no injuries were reported. Authorities later closed the main road and tunnel leading to the airport, and Emirates said flights there remained suspended until further notice.

Elsewhere, a drone attack briefly halted oil loadings at the UAE’s Port of Fujairah, and a missile hit inside the U.S. embassy compound in Baghdad. Strikes were also reported on Kuwait’s Ali Al Salem airbase and Baghdad International Airport, underscoring the breadth of regional risk to energy and transport links.

U.S. President Donald Trump has responded by pressing allies to help reopen the Strait of Hormuz. He said his administration is in talks with about seven countries to send warships to escort tankers and police the waterway, arguing that nations heavily reliant on Gulf crude should help protect the route.

Trump has specifically urged NATO partners and China to contribute and suggested he could delay a planned summit with Chinese President Xi Jinping if Beijing does not assist. He warned that failing to support the effort would be “very bad for the future of NATO,” while some countries, including Australia and Japan, have indicated they will not deploy warships, though Australia is providing defensive support to the UAE.

Washington has also continued military operations, including strikes on Kharg Island, Iran’s main oil export hub. Iran, in turn, has warned it will target any regional facilities with U.S. ties and accused the United States of using Emirati ports to launch attacks.

The price spike is feeding into broader economic concerns. Former IMF chief economist Gita Gopinath said that if oil averages $85 a barrel in 2026, global growth could be cut by 0.3–0.4 percentage points and headline inflation could rise by 60 basis points, compared with pre-conflict assumptions of $65 oil and 3.3% growth.

Gold (XAUUSD) traded around $5,020 an ounce, steady after earlier losses, as a softer dollar and lower U.S. Treasury yields offset reduced expectations for near-term Federal Reserve rate cuts. Elevated energy prices are seen complicating the Fed’s efforts to lower interest rates.

Equity and currency markets have come under pressure, particularly in Asia. India’s Nifty 50 and Sensex opened slightly lower as Brent (UKOIL) hovered near $104, while the rupee traded near a record low, with traders citing the risk that $100-plus oil “becomes the new normal for a while.” Asian stock moves were mixed overall, and Wall Street benchmarks have logged three straight weekly losses as higher oil prices stoke inflation fears.

Governments are turning to emergency measures to cushion supply disruptions. Members of the International Energy Agency are making a record 400 million barrels of oil available from reserves. Japan began releasing about 80 million barrels from private and state-held stocks, equivalent to roughly 45 days of supply, reflecting how seriously Asian importers view the Hormuz threat.

U.S. officials have sought to reassure markets. Energy Secretary Chris Wright said the war would “certainly come to the end in the next few weeks” and predicted energy prices would ease afterward, while Trump has insisted that a multinational naval coalition would begin operations as soon as partner commitments are secured.