Global oil prices saw a significant surge on Monday due to escalating tensions in West Asia, triggered by Yemen’s Iran-backed Houthi group entering the conflict. Brent crude futures rose by 3.66% to reach $116.70 per barrel, nearing a fresh 52-week high. Similarly, US benchmark West Texas Intermediate (WTI) also climbed over 3% to surpass $103 per barrel.
This surge in crude prices followed missile launches by Houthi forces targeting Israel over the weekend. The group has threatened to continue attacks until strikes on Iran and its allied militias stop, adding more risk to the already strained global energy markets. Brent prices have surged over 50% in March, approaching early-war highs, despite ongoing diplomatic efforts.
Market analysts highlight that crude oil remains a crucial macro variable at this point. They mention that market participants are increasingly factoring in a scenario of prolonged supply disruption, with some global estimates suggesting a potential spike towards $200 per barrel if tensions persist. This situation poses risks for import-dependent economies like India, including higher inflation, pressure on corporate margins, and a deteriorating current account outlook.
Equity markets globally also faced pressure, with US and Asian stocks trading negatively. Wall Street closed lower, with the S&P 500 down by 1.67% and the Nasdaq declining about 2%. In Asia, Japan’s Nikkei dropped nearly 4%, Hong Kong’s Hang Seng fell over 1%, and South Korea’s Kospi slipped almost 3%. Additionally, domestic equity indices like Sensex and Nifty started the session weak, each declining over 1% in early trade as the West Asia conflict entered its fifth week and expanded further.
