Global oil prices surged past $115 per barrel, while Asian stock markets experienced sharp declines on Monday, signaling growing economic uncertainty as the war between the US-Israel and Iran entered its fifth week, according to the BBC.

Escalating Tensions and Market Reactions

Brent crude climbed over 3% to above $115 (£86.77) per barrel, while US-traded oil hit $101.62 after gaining nearly 2%, while this puts Brent on track for its largest monthly gain in history, as the ongoing conflict continues to disrupt global energy markets.

In Asia. Japan’s Nikkei 225 lost 2.8%, and South Korea’s Kospi closed nearly 3% lower. The sharp decline in shares reflects growing fears about the economic repercussions of the conflict, particularly as Iran-backed Houthi rebels in Yemen joined the fighting by launching attacks on Israel over the weekend.

Iran has also warned of expanding retaliatory strikes against universities and the homes of US and Israeli officials. Meanwhile, US President Donald Trump, in an interview with the Financial Times, said he could “take the oil in Iran” and possibly seize its major fuel hub, Kharg Island. He dismissed concerns about Iranian defenses on the island, stating, “I don’t think they have any defense. We could take it very easily.”

Trump compared this potential move to the US’s planned indefinite control of Venezuela’s oil industry after the January seizure of former President Nicolás Maduro, as his comments have further heightened concerns about the potential for a wider conflict in the region.

Energy Markets and Supply Chain Concerns

Global energy markets have been highly volatile since Iran retaliated against US and Israeli strikes by threatening to attack ships attempting to cross the Strait of Hormuz. Lars Jensen. A former Maersk director and shipping expert, warned that even if the Strait of Hormuz “magically were to open tomorrow,” further price increases were likely.

Jensen explained that a significant portion of oil loaded in the Persian Gulf before the crisis is only now reaching refineries. “We need to keep in mind that a lot of the oil that was loaded in the Persian Gulf prior to this crisis is only now arriving in refineries,” he told the BBC.

He also warned that the impact of the current conflict could be “substantially larger” than the 1970s oil crisis, which triggered widespread economic disruption. Jensen, now running the shipping consultancy Vespucci Maritime, added that the conflict could also lead to a sharp rise in food prices, particularly in poorer countries.

“You’ve got 20 to 30% of the seaborne fertiliser in the world originating from the Gulf,” he said. “This will mean rapidly escalating food prices, especially in poorer countries.”

Economic Implications and Future Outlook

Investment firm Downing partner Judith McKenzie said the full impact of the war is yet to be felt by consumers. “Oil shocks don’t show up instantly,” she told BBC Radio 4’s Today programme. “If we can get some resolution in the Gulf this week then, although it’s going to take a little bit of time to unwind and we will see inflation, it is fixable.”

Around a fifth of the world’s oil and gas supply passes through the Strait of Hormuz, but the waterway has largely come to a standstill, pushing up prices. Energy markets expert Sean Foley from Macquarie University said he expected oil prices to rise further unless the conflict eases.

The Houthi strikes have raised concerns that the armed group could block energy shipments through the Bab al-Mandeb strait near Yemen. A blockade could affect an additional 10% of the world’s oil supply, “putting significant strain on global supply chains,” Foley said.

Andrew Lipow from consulting firm Lipow Oil Associates expects the price of Brent to reach $130 a barrel in the coming weeks as threats against the global energy supply continue. “My greatest fear is that you have a general economic slowdown around the world… because consumers simply run out of money as they’re spending more on energy and, in addition, food,” he said.

The price of Brent was at around $72 a barrel on 27 February, the day before the US and Israel struck Iran, while On 18 March, the benchmark oil contract hit $119.50, the highest level since June 2022.

The ongoing conflict shows no signs of abating, with further military movements and diplomatic tensions likely to shape the coming weeks — As oil prices continue to rise, the economic fallout for both developed and developing nations could become increasingly severe.