LONDON/DUBAI: Global oil prices extended gains on Monday after fresh attacks in the Gulf intensified fears of supply disruptions, lifting energy markets already rattled by geopolitical tensions, rising bond yields, and concerns over shipping through the Strait of Hormuz.
Prices Climb on Renewed Unrest
Brent crude futures rose around 1.2 percent to about 110.7abarrel,whileUSWestTexasIntermediate(WTI)crudegainedroughly1.0−1.8percenttotradenear106-107abarrel.MurbancrudefromtheUnitedArabEmiratesrecordedthesharpestincreaseamongmajorbenchmarks,climbingabout3.3percenttoaround108 a barrel.
The latest rally followed a drone strike that triggered a fire at a nuclear power facility in the United Arab Emirates, while Saudi Arabia said it intercepted three drones targeting the kingdom. The developments renewed concerns over instability in the Gulf region, a critical hub for global energy supplies.
Inventory Warning and Recession Fears
Concerns have increasingly centered on the Strait of Hormuz, a strategic waterway through which roughly one-fifth of the world’s oil trade passes. “The closure is draining global oil inventories fast,” analysts at Capital Economics said in a note. They warned inventories could fall to critical levels by the end of June, potentially pushing Brent crude prices to between 130and140 per barrel if disruptions intensify further.
Analysts also cautioned that if the Strait of Hormuz remained closed through the end of the year and oil prices stayed near $150 per barrel, inflation in major economies could approach 10 percent, raising the risk of a global recession.
Market Fallout
US Treasury yields climbed sharply, with benchmark 10-year yields rising to 4.584 percent. Asian equities weakened as investors shifted toward safer assets; Japan’s Nikkei fell about 0.4 percent, while South Korean stocks dropped more than 2 percent. The US dollar strengthened on safe-haven demand.
Pakistan Impact
In Pakistan, the latest increase in global crude prices could add pressure on domestic fuel prices after the government recently announced a modest reduction in petrol and diesel rates. Analysts said continued gains in international oil markets may force Islamabad to raise petroleum product prices again in the coming weeks. Investors are also watching a G7 finance ministers meeting in Paris focused on the Strait of Hormuz and global supply chains.
