Brent crude tops $108 as US-Iran conflict roils global markets

Brent crude oil surged past $108 per barrel on Thursday, hitting its highest level since May, as escalating military exchanges between the United States and Iran stoked fears of prolonged disruptions to global energy supplies. The rally sent shockwaves through Asian markets on Friday, with India's Sensex plunging over 700 points and the Nifty 50 sliding more than 200 points in early trade.

Oil's Volatile Climb

Brent crude rose as much as 7.1% on Thursday, peaking at $108 per barrel before settling at $107.63, a 6.34% gain on the day, according to CNN. West Texas Intermediate crude also climbed above $103 per barrel. The benchmark has now gained nearly 80% this year, though it remains below its wartime peak above $126 reached in April, Bloomberg reported.worldoil+2

The price spike follows an intensification of hostilities between Washington and Tehran in early September. On September 1, the U.S. launched strikes on Iranian military sites after the Islamic Revolutionary Guard Corps attempted to attack U.S. troops and commercial shipping in the Strait of Hormuz, according to the Associated Press. Iran retaliated with ballistic missile attacks on U.S. bases in Jordan, Bahrain, and Iraq. The conflict, which began on February 28, has now entered its seventh month with diplomatic efforts at an impasse.aljazeera+1

The Strait of Hormuz, through which roughly a fifth of the world's oil passes, has been a focal point of the crisis. Iran has blocked large vessel traffic through the strait since February, and between July and early September, there were 27 missile strikes in the waterway. The U.S. military has been facilitating transits through the strait, escorting 44 ships between September 1 and 2 alone.wikipedia+1

Indian Markets Bear the Brunt

India, which imports roughly 85% of its crude oil, was hit hard. The BSE Sensex opened at 74,309.16, down more than 700 points from its previous close of 74,902.59, while the Nifty 50 opened at 23,270.30, shedding over 200 points. The Indian rupee weakened to 95.69 against the U.S. dollar.dynamitenews+1

Sharp selling pressure hit banking, auto, metal, and energy stocks, according to the Financial Express. South Korea's Kospi dropped 2.7% and Japan's Nikkei 225 slipped 2.6% in early Friday trading.financialexpress

Supply Squeeze Deepens

The combination of military disruptions in the Strait of Hormuz, declining Saudi Arabian output due to Houthi rebel threats, and renewed Chinese buying interest has created what analysts describe as a severe supply squeeze. G. Chokkalingam, Head of Research at Equinomics Research, warned that Indian markets could remain under pressure due to high oil prices, weak rainfall conditions, and increased IPO activity. Without progress on the geopolitical front, volatility is expected to persist through September.zoomnews+1