Oil prices surged on Monday as the Middle East crisis escalated, driven by US President Donald Trump's threat to destroy Iran's main export terminal. The international benchmark, Brent North Sea crude, jumped to almost $117 per barrel in Asian trading, up 2.3 per cent at $107.71 per barrel in late morning trading in New York. Trump's warning that US forces would "blow up" Kharg Island and all of Iran's oil wells and electricity generation if a negotiated settlement was not reached or if Iran continued to block the Strait of Hormuz sent shockwaves through oil markets.
Markets, however, focused on Trump's comments on negotiations to end the fighting, with European and US stocks rising. Wall Street's main equities were higher in late morning trading, with the Dow adding 0.7 per cent. Analysts noted that the impact of Trump's statements was getting weaker, with investors becoming more sceptical until they see concrete action from senior US officials.
The Middle East war has had a significant impact on global trade, with the Houthi rebels' ability to disrupt shipping through the Bab al-Mandeb strait posing a major risk. Analysts at Nomura warned that India, one of the most vulnerable economies within Asia to an energy price shock, is particularly exposed.
