Oil stays above $100 as Khamenei ramps up Hormuz pressure, stocks retreat

Oil prices hovered above $100 a barrel on Friday as global equity markets declined after Iran’s new supreme leader called for blocking the Strait of Hormuz, a key energy shipping route, while warning of further escalation in the conflict with the United States and Israel.

The Hindu reported on how conflict, now entering its third week, has intensified concerns among investors about a prolonged crisis that could drive inflation higher and weaken the global economy.

Energy markets have already been rattled by a series of attacks on energy infrastructure across the Gulf region this week. AFP said ships were reportedly struck near Iraq, fuel storage facilities were targeted in Bahrain, and drones were launched at oil fields in Saudi Arabia.

Tehran also warned on Thursday that it could “set the region’s oil and gas on fire” if its own energy facilities or ports were attacked.

In his first public remarks since succeeding his father earlier this week, Mojtaba Khamenei said the Strait of Hormuz — through which roughly a fifth of global oil and gas supplies pass — should remain effectively closed.

“The lever of blocking the Strait of Hormuz must definitely be used,” he said in a statement broadcast on state television.

Khamenei also suggested that Iran could open additional fronts in the conflict, saying plans had been studied to target areas where adversaries had limited experience and would be particularly vulnerable.

Oil markets reacted sharply to the escalating rhetoric. Brent crude rose more than nine per cent on Thursday, closing above $100 a barrel for the first time since the Russian invasion of Ukraine in 2022. Prices have climbed about 40 per cent since the Middle East conflict began on 28 February.

Despite the International Energy Agency releasing a record 400 million barrels from emergency stockpiles, analysts said the move had little immediate impact on prices.

The agency warned that the conflict was creating “the largest supply disruption in the history of the global oil market”.

Financial markets have also reacted nervously. Equity markets across Asia fell on Friday, with losses recorded in Tokyo, Hong Kong, Shanghai, Singapore, Seoul, Wellington, Manila and Jakarta, reflecting investor concerns about energy supply risks and economic instability.

The United States dollar remained firm against major currencies as traders sought safe-haven assets amid fears of persistent inflation and the likelihood that interest rates could stay higher for longer.

US President Donald Trump struck a defiant tone on social media, arguing that rising oil prices could benefit the American economy because of the country’s strong energy production.

However, he added that his primary focus remained preventing Iran from developing nuclear weapons and destabilising the region.

Market analysts say uncertainty surrounding the Strait of Hormuz will continue to dominate investor sentiment.

Chris Weston of Pepperstone said markets were increasingly pricing in a longer conflict and the risk of disruptions to shipping through the strait.

He added that any effort by Washington to escort vessels through the waterway could trigger a relief rally in markets, but warned that volatility would likely remain high in the meantime.

Matt Weller of City Index said the combination of rising energy prices, pressure on equities and higher interest rates signalled a major shift from the favourable market conditions seen in recent years.

“Unless or until we see meaningful progress toward a ceasefire in the Middle East, traders should expect markets in the coming months to look very different from the past few years,” he said.