Oil prices jumped nearly 25% on Monday to their highest levels since mid-2022, with Brent crude on track for its biggest ever daily gain, amid escalating tensions with Iran that have tightened global energy supplies.
Brent crude rose by about 24.4% to $115.35 a barrel, as the US-Israeli conflict with Iran widened, prompting some major Middle Eastern oil producers to cut supplies, along with growing fears of prolonged disruptions to shipping through the Strait of Hormuz, one of the world's most vital maritime chokepoints.
Meanwhile, the price of US West Texas Intermediate crude jumped 24.6% to $113.31 a barrel.
Tony Sycamore, a market analyst at IG, said in a note that the market reaction reflects investors' lack of any clear way out of the ongoing escalation in the Middle East conflict, which has now turned into a high-stakes confrontation where neither side appears willing to back down first.
He added that the risk of more lasting economic damage is increasing day by day, according to Reuters.
Iran announced on Monday the appointment of Mojtaba Khamenei as successor to his father Ali Khamenei as Supreme Leader, signaling that the hardline faction still holds the reins of power in Tehran a week after the outbreak of conflict with the United States and Israel.
The surge in oil prices is driving up vegetable oils and grains.
ING analysts said in a note that the situation appears to be deteriorating further, adding that upstream oil production is beginning to shut down as producers face storage capacity constraints. Iraq, Kuwait, and the UAE have also begun reducing oil production.
In agricultural commodity markets, Malaysian palm oil jumped nearly 9%, while Chicago soybean oil climbed to its highest level since late 2022, buoyed by the rally in crude oil. Wheat also reached its highest point since June 2024, while corn prices hit a ten-month high.
Aluminum jumps amid supply disruptions
Aluminum jumped to its highest level in four years amid growing concerns about supply as a result of the war in the Middle East.
The benchmark price for three-month aluminum contracts on the London Metal Exchange reached its highest level since March 2022 at $3,544 per ton.
Qatar's aluminum smelter Qatalum, along with Aluminium Bahrain, had already declared force majeure on shipments amid escalating tensions in the Middle East.
In contrast, other base metals came under pressure from the strength of the dollar.
