Oil surges toward $120 as West Asia conflict deepens; Trump shrugs off spike as ‘small price to pay’

Global oil prices climbed sharply on Monday as tensions in West Asia unsettled energy markets, pushing the Brent crude price above $116 a barrel and raising fresh worries about disruptions to global oil supplies.

The jump comes as the conflict involving Iran, Israel and the United States continues to intensify, adding uncertainty to the region and fuelling concerns that oil supply could be affected and inflation may rise worldwide. The growing instability has raised fears that oil supplies could be affected, which may push up fuel costs and add to inflation across many economies.

Advertisement

During Monday’s trading session, the Brent crude price rose more than 25 per cent to about $116.5 per barrel, with prices briefly touching $119.45 at one point. Analysts say the sharp surge reflects growing anxiety in financial markets as the conflict intensifies.

Rising tensions push crude oil prices higher

The crisis in West Asia has widened into a multi-front confrontation after coordinated US–Israeli strikes on Iran. Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in the attack.

Market watchers say the escalating situation has already begun to affect investor sentiment and energy markets globally.

Banking and market expert Ajay Bagga told news agency ANI that oil markets were reacting strongly to the possibility of shortages and rising geopolitical risk.

“Oil prices are rising 18 per cent to 20 per cent this morning in Asia, transmitting a massive risk off to markets as fear takes centre stage. Oil prices are the basis of pricing in the economy. A 20 per cent global shortage of oil is now getting reflected in prices, which may go up further to the USD 150 level on Brent,” Bagga said.

According to Bagga, a strong “fear premium” has already entered global markets, reflecting the uncertainty surrounding the conflict.

At such elevated price levels, he warned, demand destruction could follow as businesses and consumers cut back spending.

Oil prices also have a direct impact on food and consumer goods, he said, meaning a sustained spike could lead to broader inflation across economies.

Bagga cautioned that central banks might be forced to tighten monetary policy if inflation remains high, potentially pushing the global economy closer to recession.

“Monetary policy tightening may be forced onto central banks if this inflation stays elevated for a longer time. Overall, these levels of inflation point to an incipient global recession on the back of aggregate demand turning negative as marginal consumers stop discretionary consumption and cut back on non-discretionary consumption,” he added.

Trump says short-term oil spike is ‘worth the cost’

Amid rising oil prices, US President Donald Trump sought to calm concerns, arguing that the surge would be temporary if Iran’s nuclear capabilities were eliminated.

In a post on Truth Social, Trump said the short-term spike in fuel prices was a small price to pay for global security.

“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY!” he wrote.

Trump’s comments come as oil markets react sharply to the conflict. According to CNN Business, crude prices crossed $100 per barrel on Sunday for the first time since the Russia–Ukraine war began in 2022.

The report said investors are worried that the conflict with Iran could disrupt the global oil supply. There are fears the situation may worsen if attacks begin targeting oil facilities and other energy infrastructure across West Asia and the Gulf region.

US oil futures reportedly jumped about 18 per cent to around $108 per barrel, the highest level since July 2022, while Brent crude futures rose roughly 16 per cent, approaching the same mark.

The spike has also unsettled financial markets. CNN Business reported that Dow futures dropped more than 800 points, while S&P 500 and Nasdaq futures declined about 1.6 per cent each.

Fuel prices have already begun to rise in the United States. According to data from AAA, the average gasoline price reached $3.45 per gallon on Sunday, up about 16 per cent from the previous week.