Global financial hubs experienced a day of extreme contrast on Monday as the conflict in the Middle East sent shockwaves through energy markets. Early trading was characterized by fear, as Brent crude soared to $119.50, marking a four-year high. However, by the time New York traders headed home, prices had leveled out significantly, allowing US stocks to end the day with surprising gains.
The chaos was triggered by a series of strikes on Iranian energy facilities, which residents described as having an “apocalyptic” impact. This was compounded by Bahrain’s state oil company invoking “force majeure” after its refinery was attacked. These events initially led to a broad sell-off in Japan and Europe, where the Stoxx 600 erased all its gains for the year in a single session.
Market sentiment began to pivot following a report that President Trump viewed the military operations against Iran as largely finished. This “mission accomplished” tone led to a quick retreat in oil prices, with WTI dropping back to the mid-$80s. The Dow Jones responded with a 230-point rally, signaling that investors are willing to bet on a swift resolution to the conflict.
Despite the late-day rally in the US, the structural problems in the oil market persist. Analysts at the Center for Strategic and International Studies pointed out that a 20-million-barrel daily deficit is not easily ignored. Qatar’s energy minister warned that a prolonged war could force all Gulf exporters to halt production, potentially driving prices to $150 per barrel.
International governments are now taking defensive stances to protect their citizens from the price surge. From South Korea’s fuel price caps to Bangladesh’s emergency university closures, the real-world consequences of the oil spike are becoming widespread. The durability of the current market recovery will depend on whether shipping through the Strait of Hormuz can safely resume.