The price of oil rose sharply to $ 116 a barrel after Donald Trump said he wanted to “take oil from Iran”, sending Asian markets to fall.
Brent crude, the international oil benchmark, rose 2% in early trade on Monday, after Trump said he may seize Iran’s offshore Kharg Island facility.
Trump told the Financial Times in an interview on Sunday: “To be honest with you, my favorite thing is to take oil from Iran, but some stupid people back in the US are saying: ‘Why are you doing that?’ But they are stupid people.”
“Maybe we take Kharg Island, maybe we don’t. We have many options,” he said.
In Asia, where the economy is most exposed to the shortage of oil and gas from the Gulf, the stock market fell sharply. Japan’s Nikkei fell 3%, while South Korea’s Kospi fell 3.4%. Hong Kong’s Hang Seng index fell nearly 1%.
European markets were slightly lower in early trade on Monday, with the European Stoxx 600 index slipping 0.1%. The UK’s blue-chip FTSE 100 index rose 0.2%, led by miners Rio Tinto and Glencore.
Natural gas prices rose in Europe on Monday amid concerns that supplies will be disrupted further. Dutch monthly futures rose 1.6% to €55 per megawatt hour.
Investors are getting more nervous as tensions in the Middle East escalate in recent days as another 3,500 US troops have arrived in the Middle East.
Yemen’s Houthi rebels have also joined the conflict, firing missiles into Israeli positions, in a dangerous military operation that could exacerbate the global energy crisis.
“There is still no sign of a clear end to the conflict, and given the various headlines, investors remain nervous about a new escalation,” Deutsche Bank analysts said.
The war in the Middle East has pushed oil prices to historic levels, with Brent crude poised for its biggest monthly gain – up 59% since the start of March – surpassing the previous record of 46% set in September 1990 after Saddam Hussein invaded Kuwait.
Keir Starmer is expected to hold talks on Monday afternoon with executives from Shell, BP and Norwegian energy company Equinor, as well as executives from the finance, insurance and shipping industries, on the Middle East crisis. The Prime Minister of the UK is expected to discuss what emergency measures may be required to deliver the crisis from the blockade of the strait of Hormuz.
Brent traded as much as $119.50 a barrel in March, its highest level since June 2022, after Iran blocked the route, through which a fifth of the world’s oil and gas would pass.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: “There are bets that could go up to $150 and even $200 per barrel if the war does not end quickly.
Aluminum prices rose more than 5% in Asia after Iran hit aluminum producers Bahrain and the UAE over the weekend, he added.
Meanwhile, the Chancellor, Rachel Reeves, is expected to warn the G7 countries that they must act quickly on clean energy to protect the economy against the world prices from oil and gas, as she and the energy secretary, Ed Miliband, are about to meet the finance and energy ministers of the G7 on Monday.
It comes as industry figures warned there could be a “temporary shortage” at UK petrol pumps, as supplies are squeezed by the Middle East conflict, which has already pushed petrol prices above 150p a litre.
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