Historic Volatility in Global Oil Markets Amid U.S.-Iran Conflict
Global oil markets have witnessed unprecedented volatility as West Texas Intermediate crude oil surged above $90 per barrel for the first time in four years. This surge is primarily driven by the escalating tensions arising from the U.S.-Iran conflict.
U.S. crude posted its biggest weekly gain since oil futures trading began in 1983, jumping 35% in a single week. Concurrently, Brent crude climbed to $92.32 per barrel. The spike in prices accelerated following President Donald Trump’s statement on Truth Social, insisting that there would be no deal to end hostilities without an “unconditional surrender” from Iran.
The Strait of Hormuz, a critical corridor for global oil transport, remains effectively shut. This closure jeopardizes supplies and threatens that prices could reach $100 or even $200 per barrel if Gulf energy producers halt exports. Despite the turmoil, energy sector stocks benefited from the surge, with the S&P Energy Sector rising even as broader markets tumbled.
The oil price shock has also contributed to market turmoil, with the S&P 500 falling 1.33% and the Nasdaq dropping 1.59% on Friday. The Cboe Volatility Index jumped over 23% to 29.26. Analysts warn that this disruption also affects the transport of fertilizer ingredients, thereby impacting agricultural markets just before the planting season.
Source: CNBC