Oil prices surge as Iran-US tensions and Gulf security fears escalate

Global oil prices extended their upward momentum on Monday as escalating tensions between the United States and Iran, along with renewed security concerns in the Gulf region, continued to unsettle energy markets.

Brent crude futures rose by $2.03, or 1.86%, reaching $111.29 per barrel by 0720 PKT after briefly touching $112, the highest level since May 5. Meanwhile, West Texas Intermediate (WTI) crude climbed $2.31, or 2.19%, to $107.73 per barrel after hitting $108.70 earlier in the session, marking its strongest level since April 30. The front-month June contract is set to expire on Tuesday.

Prices have gained more than 7% over the past week as hopes for a diplomatic breakthrough between Washington and Tehran weakened. Markets remain sensitive to developments in the Strait of Hormuz, a critical chokepoint for global oil shipments, where shipping disruptions and security incidents have raised concerns about supply stability.

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Tensions intensified after reports of attacks on energy-related infrastructure in the Gulf, including a nuclear facility in the United Arab Emirates. Analysts say such incidents have heightened fears of a broader regional escalation that could directly impact global crude flows.

Investor sentiment was further affected by statements from US officials and Iranian military figures, warning of possible retaliation and continued confrontation. The uncertainty has led traders to price in a higher geopolitical risk premium, keeping oil markets volatile.

Industry experts warn that prolonged instability in the region could lead to sustained supply disruptions and put upward pressure on inflation worldwide. Higher energy costs could also influence central bank decisions, potentially keeping interest rates elevated for longer periods.

Despite ongoing diplomatic discussions involving global powers, no clear pathway to de-escalation has emerged. Markets are now closely watching political developments in Washington, Tehran, and Beijing, as well as maritime security conditions in the Gulf, for signs of either escalation or relief.