Doha – Global oil prices surged while stock markets slid this week as fresh conflict in the Middle East rattled investors and raised fears over energy supplies.
President Donald Trump suggested to the Daily Mail that the conflict could last for four more weeks, while posting that attacks would continue until U.S. objectives were met.
At the centre of market anxiety is the Strait of Hormuz, a strategic waterway through which around a fifth of the world’s seaborne oil trade flows, along with about 20 percent of global liquefied natural gas shipments. Although the strait has not been formally closed, marine tracking sites showed oil tankers building up on either side, wary of possible attacks or struggling to secure insurance cover for the voyage.
“The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million barrels per day bpd of crude oil from reaching markets,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.
“Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil.”
For countries like Eswatini, which rely on imported fuel largely routed through South Africa, any sustained rise in global oil prices is likely to feed into higher pump prices and transport costs, placing added strain on consumers and businesses already grappling with rising living expenses.
Analysts warn that a prolonged spike in oil prices could reignite inflationary pressures worldwide. Higher energy costs often act as an indirect tax on households and firms, reducing spending power and slowing economic growth.
OPEC+ agreed on Sunday to a modest output increase of 206,000 barrels per day for April. However, much of that supply must still be shipped from the Middle East by tanker, leaving markets exposed if transport routes remain disrupted.
“The nearest historical analogue in our view is the Middle East oil embargo of the 1970s, which increased oil prices by 300% to around $12 per barrel in 1974,” said Alan Gelder, SVP of refining, chemicals and oil markets at Wood Mackenzie.
“That is only US$90 per barrel in 2026 terms. Eclipsing this in today’s market concerned about significant losses of supply seems very achievable.”
Asian markets reacted sharply. In Japan, which imports all its oil, the Nikkei 225 fell 1.3 percent, with airline stocks among the hardest hit due to the prospect of higher jet fuel costs.
In the Middle East, the United Arab Emirates and Kuwait temporarily shut their stock exchanges citing exceptional circumstances.
European markets followed suit. EURO STOXX 50 futures dropped 1.3 percent, while DAX futures slid 1.4 percent. FTSE 100 futures were down 0.6 percent.
On Wall Street, futures for the S&P 500 and the Nasdaq Composite both fell 0.8 percent.
Currency markets also felt the shock. The U.S. dollar strengthened as investors sought perceived safe haven assets. The euro slipped 0.2 percent to $1.1787. While the Japanese yen is often viewed as a refuge in turbulent times, Japan’s heavy reliance on imported oil made movements more mixed, with the dollar rising 0.3 percent to 156.44 yen.
In bond markets, 10 year U.S. Treasury yields steadied at 3.970 percent after briefly touching an 11 month low of 3.926 percent. U.S. government debt continues to be regarded as a liquid haven during periods of uncertainty.
Adding to market jitters, UK mortgage lender MFS was placed into administration following allegations of financial irregularities. The firm had borrowed 2 billion pounds from major banks, and its collapse deepened credit concerns, dragging banking shares lower and compounding pressure from volatility in artificial intelligence related stocks.
Investors are now bracing for a heavy week of U.S. economic data, including the ISM manufacturing survey, retail sales figures and the closely watched payrolls report. Any signs of weakness after a disappointing fourth quarter could dent confidence in the world’s largest economy, while also reshaping expectations around interest rate cuts by the Federal Reserve.
Markets are currently pricing in a 50 percent chance of a rate cut in June, with roughly 58 basis points of easing expected over the course of the year.
