Global commodity markets were rocked on Monday as oil prices surged by about 25% while gold declined, following escalating war involving Iran, the United States and Israel that raised fears of major supply disruptions in the Middle East.
Benchmark Brent crude climbed to around $119.50 per barrel, marking its highest level since mid-2022 and one of the largest single-day price jumps in years. The surge was driven by mounting concerns that the conflict could disrupt oil shipments from the Gulf region and threaten supply routes through the strategically critical Strait of Hormuz, a key passage for global energy trade.
Traders said fears of reduced supply from major Middle Eastern producers triggered aggressive buying in energy markets. The conflict has already disrupted production and shipping activity in several countries, intensifying concerns about a prolonged supply shock that could push prices even higher.
Despite heightened geopolitical tensions, gold prices fell more than 2%, weighed down by a stronger U.S. dollar. The currency’s rally made bullion more expensive for buyers using other currencies, reducing demand for the traditional safe-haven asset.
The shockwaves from the conflict extended beyond energy markets. Prices of industrial metals also moved sharply, with aluminium rising to a four-year high near $3,544 per tonne, as supply disruptions affected smelters in Gulf countries such as Qatar and Bahrain. Some producers in the region declared force majeure on shipments due to the deteriorating security situation.
Agricultural commodities were also affected, with wheat, corn and vegetable oils climbing as higher oil prices boosted demand for biofuel-linked crops such as soybean oil and palm oil. Analysts warned that sustained energy price increases could push global food prices higher and worsen inflation pressures worldwide.
Financial markets reacted sharply to the geopolitical shock. Stock futures in the United States dropped steeply while Asian and global markets faced heavy losses as investors moved away from riskier assets.
Energy analysts said the key risk lies in the possibility of prolonged disruption to Middle Eastern energy flows. Roughly 20% of the world’s oil supply normally passes through the Strait of Hormuz, making the waterway one of the most critical chokepoints for global energy trade.
If the conflict continues to intensify, economists warn that soaring oil prices could drive global inflation, slow economic growth and increase the risk of recession in energy-importing economies.
For now, commodity traders and policymakers are closely monitoring developments in the region, as military escalation between Iran and its adversaries threatens to further destabilize global markets in the days ahead.