By Hanna Ziady, NCS
London (NCS) — Oil prices rose Monday, with Brent crude crossing $116 a barrel, after feedback by US President Donald Trump and strikes in opposition to Israel by Iran-backed Houthi rebels deepened fears that the Middle East conflict might escalate additional.
Brent crude, the international oil benchmark, rose to $116.5 a barrel earlier than paring these positive factors to commerce at $114.6, 1.8% up on the day. WTI, the US benchmark, climbed 1% to round $101 a barrel.
Trump instructed the Financial Times in an interview revealed Sunday that he wants to “take the oil in Iran” and may seize Kharg Island, which handles about 90% of the nation’s oil exports. He in contrast the potential transfer to US operations in Venezuela, in accordance to the FT, the place the United States intends to management the oil trade “indefinitely” following its seize of authoritarian chief Nicolás Maduro in January.
Adding to fears a few ramp-up in the combating, Iran-backed Houthi militants in Yemen joined the battle over the weekend, launching strikes in opposition to Israel Saturday. The rebels may shut the Bab al-Mandab Strait, a chokepoint linking the Red Sea to international delivery strains.
Meanwhile, the United States has despatched 1000’s of troops to the Middle East over the previous week, and Mohammad Bagher Ghalibaf, Iran’s parliamentary speaker, on Sunday accused the United States of “secretly planning a ground invasion” whereas touting negotiations. He additionally stated Tehran’s forces are “waiting” for US troops.
Crude oil costs have surged greater than 50% up to now in March following the US-Israeli war in opposition to Iran. On Friday, Brent settled at $112.57, its highest settlement degree since 2022. Brent had traded round $73 a barrel earlier than the United States and Israel attacked Iran on February 28, prompting Tehran to choke off the Strait of Hormuz, which ordinarily carries round a fifth of worldwide oil provide.
Despite indicators of the battle intensifying, Trump told reporters aboard Air Force One Sunday that the US was having “very good” negotiations with Iran, including that Tehran had agreed to “most of” Washington’s 15-point listing of calls for to finish the war. Iranian officers have beforehand expressed skepticism of the plan, which is believed to embrace a dedication to not growing nuclear weapons, handing over Iran’s extremely enriched uranium and reopening the Strait of Hormuz.
Foreign ministers from Pakistan, Saudi Arabia, Egypt and Turkey are additionally working to convey the war to an finish. The officers gathered Sunday in what was described as a “very productive” assembly, in accordance to Pakistan’s Foreign Minister Ishaq Dar. He added that Pakistan will facilitate talks between the United States and Iran in the “coming days.”
$200 oil, $7 gasoline if war drags on
Investors, nonetheless, are rising more and more nervous.
“There’s still no sign of a clear end to the conflict, and given the various headlines, investors remain fearful about a fresh escalation,” Jim Reid, head of worldwide macroeconomic analysis at Deutsche Bank, wrote in a observe Monday. According to Reid, “the market impact is becoming increasingly serious,” as “investors price in a more protracted conflict.”
He famous that the S&P 500 has now fallen for 5 consecutive weeks, its longest dropping streak since 2022, when the international economic system was dealing with an identical threat of larger inflation and decrease financial progress.
On Monday, Asian markets closed down with heavy promoting in Seoul and Tokyo. European markets have been principally larger by the afternoon whereas US futures pointed to a barely stronger open.
Brent crude oil may attain $200 a barrel if the war continues till the finish of June, equating to a US gasoline value of $7 per gallon, analysts at Macquarie Group wrote in a observe Friday. If the Strait of Hormuz have been to stay shut till the finish of June, given its significance to oil provide, costs would want to transfer excessive sufficient for international demand for oil to fall, the analysts wrote. They put the probability of this end result at 40%.
In a unique situation, assigned a likelihood of 60%, the battle ceases at the finish of this month and oil costs fall shortly. Still, costs stay above these seen earlier than the war, returning to “the low $80s next year,” the Macquarie analysts stated.
“If the war begins to wind down soon, the economic costs will likely be relatively small, with global (economic) growth to slow only a little relative to last year,” they added.
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