Oil Surges and Gold Jumps as Iran Conflict Disrupts Middle East Supply and Sparks Safe-Haven Rush

Oil prices surged by as much as 12% on Monday after shipping through the crucial Strait of Hormuz was disrupted by escalating conflict between Iran, Israel, and the United States, following strikes that killed Iranian Supreme Leader Ayatollah Ali Khamenei. The turmoil simultaneously drove gold sharply higher as investors sought safety from spreading regional instability.

Brent crude futures rose to an intraday high of $82.37 a barrel, the highest since January 2025, before settling up $5.41, or 7.4%, at $78.28. U.S. West Texas Intermediate climbed to $75.33, up over 11% and the highest since June, before paring gains to trade up $4.74, or 7.1%, at $71.76.

The price spike followed a sustained exchange of counterattacks that damaged tankers and sharply disrupted shipments in the Strait of Hormuz, a waterway between Iran and Oman through which ships carrying about one-fifth of global oil demand typically pass. On Sunday, three tankers were damaged, and one seafarer was killed in Gulf waters. Shipping data showed more than 200 vessels, including oil and liquefied gas tankers, have dropped anchor outside the strait.

"Markets are acknowledging the seriousness of the conflict, but are also signalling that, for now, this is a geopolitical shock, not a systemic crisis," said Priyanka Sachdeva, senior analyst at Phillip Nova. Analysts warned that prolonged closure of the strait would push prices higher and cause supply shortages for top importers China and India.

Citi analysts expect Brent to trade between $80 and $90 this week amid the ongoing conflict, while some forecasts suggest prices could test $100 if disruptions persist. OPEC+ responded on Sunday with a modest output boost of 206 000 barrels per day for April, but analysts noted that most producers are already at capacity except Saudi Arabia.

Asian economies are assessing the availability of oil stockpiles. South Korea will offer petroleum from its stockpiles to local industries if supply disruptions are prolonged, while India is exploring alternative shipping routes. U.S. gasoline futures surged as much as 9.1%, raising concerns about potential political fallout for President Donald Trump ahead of the November midterm elections.

Gold Surges on Safe-Haven Demand

Gold prices climbed sharply on Monday as the escalating conflict drove investors into traditional safe-haven assets. Spot gold rose 1.88% to $5 376.44 an ounce after hitting a four-week high, while U.S. gold futures gained 2.7% to $5 389.20.

"Unlike previous escalations in this conflict, there is fairly strong incentive here for both sides to continue to escalate potentially — and that runs the risk of leading to a pretty chaotic, uncertain and, therefore, volatile environment," said Kyle Rodda, senior financial market analyst at Capital.com. "The dynamic for gold is pretty positive."

Bullion has gained about a quarter so far this year, building on a 64% surge in 2025 driven by central bank buying, ETF inflows, and expectations of U.S. monetary policy easing. February marked gold's seventh consecutive monthly gain, the longest streak since 1973.

"Gold is perhaps the finest barometer to reflect global uncertainty and, to mix metaphors, the mercury is rising," said independent analyst Ross Norman. "We should expect gold to be repriced higher to fresh records as we enter a whole new era of geopolitical uncertainty."

Silver added 1.3% to $95 per ounce, while platinum rose 0.8% to $2 383.50 and palladium advanced 2.3% to $1 826.59.

Market Sentiment: 

The sentiment across both oil and gold markets is one of heightened alert and risk repricing, with geopolitical factors now overwhelming fundamental supply-demand considerations. For oil, the effective disruption of Hormuz shipping — through which 20% of global supply flows — has introduced a physical supply shock that could persist. While prices pared initial 13% gains, the new trading range around $78 Brent reflects a permanent risk premium until the strait's safety is assured. The modest OPEC+ output increase does little to offset potential sustained losses. For gold, the move above $5 370 reinforces its status as the ultimate geopolitical hedge. The simultaneous rise in both oil and gold, despite a strengthening dollar, signals genuine fear rather than typical risk-off dynamics. Gold's 25% year-to-date gain and record-breaking streak suggest institutional and central bank buyers are adding positions, not just speculators. The key uncertainty is duration: a prolonged conflict could push oil toward $100 and gold toward $6 000, while any de-escalation would trigger rapid profit-taking. Markets are now pricing for the worst while hoping for the best, a tension that will keep volatility elevated. For context, the last time oil and gold moved in such coordinated geopolitical lockstep was during the 2022 Russia-Ukraine invasion, though the current disruption to a critical chokepoint arguably carries greater immediate supply implications.

Disclaimer:
This content has been generated using AI technology and is intended for informational purposes only. While efforts have been made to ensure accuracy and relevance, this text should not be considered professional advice or an official statement. Always verify information from authoritative sources before making any decisions. This is not financial advice.