Mar 09, Kathmandu - As tensions escalate with Iran, global oil markets are experiencing a sharp surge in prices. On Monday, Brent crude oil crossed $115 per barrel, marking an increase of approximately 24% from the end of last week. Similarly, West Texas Intermediate (WTI) crude in the United States reached nearly $116 per barrel, up nearly 28% compared to previous levels.

The surge is driven by increased risks to oil production and transportation in the Middle East. The Strait of Hormuz, a vital maritime route responsible for roughly 20% of the world's oil supply—about 15 million barrels daily—is now considered highly insecure due to ongoing conflicts. Attacks on ships and threats of missile and drone attacks have caused many tanker operators to avoid the route.

Compounding the crisis, oil and gas infrastructure in the region has also been targeted. Iranian officials reported casualties following an Israeli attack on a storage facility in Tehran, which Israel claims is used for military purposes by Iran.

In response to the conflict, key Gulf countries like Iraq, Kuwait, and the UAE have reduced their oil exports, raising fears of tightening global supply. Iran, which exports around 1.6 million barrels daily—much of it to China—may face disruptions that could push China to seek alternative suppliers, further straining the global market.

Meanwhile, natural gas prices have also increased slightly, though not as dramatically as oil. The rapid rise in oil prices has heightened concerns about adverse effects on the global economy, including inflationary pressures and reduced consumer spending. Stock markets worldwide have already reacted negatively; Japan's Nikkei 225 index fell over 7% on Monday, with other markets also experiencing declines.

Analysts warn that if oil prices remain above $100 per barrel for an extended period, the global economy could face significant stress, posing risks of inflation and slowing economic growth.