Oil Up 8% as Middle Eastern War Rages
March 2, 2026
Oil surged 9% on Monday after retaliatory Iranian attacks disrupted shipping in the crucial Strait of Hormuz following the weekend's bombing by Israel and the United States that killed Iranian Supreme Leader Ali Khamenei.
A sustained jump in prices would threaten a global economic recovery, spur inflation and could push up U.S. retail gasoline prices, a risky result for President Donald Trump ahead of midterm elections this November.
The price surge on the restart of trading after the weekend, however, was less than some analyst predictions.
Brent crude futures rose as much as 13% to $82.37 a barrel, their highest since January 2025, before retreating to trade up $6.00, or 8.2%, at $78.87 a barrel by 0919 GMT.
U.S. West Texas Intermediate crude climbed to an intraday high of $75.33, up more than 12% and its highest since June, though it later pared gains and was up $5.15, or 7.7%, at $72.17.
"The latest move reflects uncertainty around the scale and duration of the current conflict and recognises that Iran’s political future may have major implications for the stability of the Middle East," said James Hosie of Shore Capital.
On Sunday, some analysts had predicted oil would open on Monday at over $90 a barrel and closer to $100.
Prices jumped as an exchange of counterattacks damaged tankers and disrupted shipments in the Strait of Hormuz between Iran and Oman that connects the Gulf to the Arabian Sea.
On a typical day, ships carrying oil equal to about one-fifth of global demand from Saudi Arabia, the UAE, Iraq, Iran, and Kuwait sail through the Strait along with tankers hauling diesel, jet fuel, gasoline and other fuels from their refineries to major Asian markets including China and India.
More than 200 vessels including oil and liquefied gas tankers have dropped anchor outside the Strait, shipping data showed on Sunday. Three tankers were damaged and one seafarer was killed in attacks in Gulf waters.
Oil pared gains after its steep surge in early Asian trade, a move that analysts attributed to buyers already factoring a risk premium into prices in anticipation of the conflict.
Brent had risen over 19% this year until Friday's close, while WTI was trading about 17% higher.
"Markets are acknowledging the seriousness of the conflict, but are also signalling that, for now, this is a geopolitical shock, not a systemic crisis," said Priyanka Sachdeva, senior analyst at Phillip Nova.
OPEC+ agreed on Sunday to an oil output boost of 206,000 barrels per day for April. Every OPEC+ producer is essentially producing at capacity except for Saudi Arabia, RBC Capital analyst Helima Croft said.
The International Energy Agency is in touch with major producers in the Middle East, director Fatih Birol said on Sunday. The energy watchdog coordinates the release of strategic petroleum reserves from developed countries during emergencies.
Globally, visible oil inventories stood at 7.827 million barrels, enough for 74 days of demand, which is near a historical median, Goldman Sachs wrote in a note.
Citi analysts expect Brent to trade between $80 and $90 a barrel this week amid the ongoing conflict.
"Our baseline view is that the Iranian leadership changes, or that the regime changes sufficiently as to stop the war within 1-2 weeks, or the U.S. decides to de-escalate having seen a change in leadership and set back Iran's missiles and nuclear program over the same timeframe," Citi analysts led by Max Layton wrote.
Analysts are also warning retail gasoline prices in the U.S., the world's biggest fuel consumer, may break above $3 a gallon because of the conflict, a potentially risky result for Trump and his Republican Party ahead of midterm elections.
U.S. gasoline futures surged by as much as 9.1% to $2.496 a gallon, their highest since July 2024, and were last up 4.3%.
(Reuters)
