Global crude oil prices surged sharply on Monday as geopolitical tensions between the US and Iran intensified. Brent crude crossed the $104 per barrel mark after US President Donald Trump rejected Iran’s response to a proposed peace deal.
The current scenario is raising fears of prolonged conflict in West Asia. The latest spike came as markets reacted to rising uncertainty over energy supply routes and escalating diplomatic friction.
Brent crude rose 3.3% to $104.64 per barrel in early trading on May 11. West Texas Intermediate gained nearly 4% to $98.99 per barrel. Earlier in the session, both were already near the $100 and $95 levels before the sharp rise affected market momentum.
The sudden price jump came after Trump dismissed Iran’s response to the peace proposal. “I have just read the response from Iran’s so-called ‘Representatives.’ I don’t like it—TOTALLY UNACCEPTABLE!” Trump stated on Truth Social. The US has made its position clear that Iran cannot be allowed to develop nuclear weapons and this has escalated the tensions further.
The conflict is now in its 11th week and has disrupted global supply chains impacting the world economy as well. Military pressure from the US and Israel on Iran is adding to market fear. Israeli Prime Minister Benjamin Netanyahu said there is still ‘work to be done,’ which has reduced hopes of any quick de-escalation.
Investors are watching the Strait of Hormuz closely. It is a key oil shipping route. Any disruption there is keeping oil markets highly sensitive.
Rising geopolitical tensions pushed investors towards the US dollar. This strengthened the dollar in global markets. The Bloomberg US dollar index rose 0.16% to 98.058. Gold prices fell as the dollar gained.
COMEX gold dropped 0.76% to $4,694.70 per ounce. A stronger dollar reduces gold demand since it becomes costlier for buyers in other currencies.
Oil traders remain cautious as the conflict shows no signs of easing. Failed diplomatic talks between Washington and Tehran have kept crude prices high for risk premiums. If tensions continue, oil markets will stay volatile.
Supply routes remain exposed to geopolitical risk. Analysts say crude may stay elevated as long as uncertainty in West Asia continues. This will keep inflation risks high for oil-importing countries.
Also Read: Crude Oil Prices Fall by $1.52 as US-Iran Peace Talks Raise Supply Expectations