Oil prices surge amid West Asia tensions, nearing yearly highs

Global oil prices climbed sharply on Monday as rising geopolitical tensions in West Asia intensified concerns over potential supply disruptions. The surge followed the involvement of Yemen’s Iran-backed Houthi group in the conflict, adding further uncertainty to already fragile energy markets.

Brent crude futures, the international benchmark, rose by as much as 3.66 per cent during the day to reach an intra-day high of $116.70 per barrel, bringing prices close to a fresh 52-week peak. Meanwhile, US benchmark West Texas Intermediate (WTI) also advanced more than 3 per cent, crossing the $103 per barrel mark.

The latest rally in crude prices came after reports of missile strikes launched over the weekend by Houthi forces targeting Israel. The group has indicated that attacks may continue unless military action against Iran and its allied groups comes to a halt, raising fears of a prolonged escalation.

Oil prices have now increased by over 50 per cent during March, returning to levels seen in the early phase of previous geopolitical conflicts, despite ongoing diplomatic efforts to contain the situation.

Market analysts noted that crude oil has emerged as a key macroeconomic concern. They warned that investors are increasingly factoring in the possibility of sustained supply disruptions, with some projections suggesting prices could climb towards $200 per barrel if tensions persist.

For economies heavily reliant on oil imports, including India, the spike presents significant challenges. These include the risk of rising inflation, pressure on corporate profitability, and a widening current account deficit.

Global equity markets also reflected the growing uncertainty. In the United States, major indices closed lower, with the S&P 500 falling 1.67 per cent and the Nasdaq dropping around 2 per cent.

Asian markets mirrored the negative sentiment. Japan’s Nikkei index declined nearly 4 per cent, Hong Kong’s Hang Seng slipped over 1 per cent, and South Korea’s Kospi fell by almost 3 per cent.

Back home, Indian benchmark indices Sensex and Nifty opened the trading session on a weak footing, each dropping more than 1 per cent in early trade as the West Asia conflict entered its fifth week and continued to expand.

With IANS inputs