Oil prices jumped above $119 per barrel on Monday, reaching levels not seen since mid-2022 after some major producers reduced supply amid fears of prolonged shipping disruptions as the war between the United States and Israel on one side and Iran on the other continues to expand.

Brent crude futures rose $12.77, or about 14%, to $105.46 per barrel by 11:26 GMT. US West Texas Intermediate crude futures also climbed $12.66, or 14%, to $103.56 per barrel.

During a highly volatile trading session, Brent earlier reached $119.50 per barrel, marking the largest absolute daily price jump in its history, while West Texas Intermediate rose to $119.48 per barrel.

Since the last market close before the strikes launched by the United States and Israel against Iran on February 28, Brent crude has risen by as much as 66%, while West Texas Intermediate has surged 77%.

Current prices are approaching the historical peak for oil futures, which reached around $147 per barrel in 2008, according to data from the London Stock Exchange Group dating back to the 1980s.

Market structure signals a severe supply shortage

The price spread between Brent crude for immediate delivery and contracts for delivery six months later rose to a new record on Monday of around $36, according to LSEG data going back to 2004.

This level is far above the previous peak of about $23 recorded in March 2022 during the early weeks of the Russia–Ukraine war.

Such a wide gap indicates a market structure known as “backwardation,” reflecting traders’ expectations of a severe shortage in current supplies.

The Strait of Hormuz, through which roughly one-fifth of global oil and liquefied natural gas exports normally pass, is now almost completely closed.

Prices were also supported by the appointment of Mojtaba Khamenei as Iran’s new supreme leader following the death of his father Ali Khamenei, signaling continued dominance of the hardline faction in Tehran after a week of war with the United States and Israel.

Risks of rising fuel prices worldwide

The conflict could leave consumers and businesses around the world facing weeks or even months of elevated fuel prices, even if the war ends quickly, due to damage to infrastructure, supply chain disruptions, and higher maritime shipping risks.

US gasoline futures rose to their highest levels since 2022 at around $3.22 per gallon, as US President Donald Trump assured consumers that the war’s impact on living costs would remain limited ahead of the midterm elections scheduled for November.

UBS analyst Giovanni Staunovo said alternatives remain limited, such as drawing from strategic petroleum reserves, but compared with the potential scale of supply disruption if the strait remains closed for longer, such measures would amount to “a drop in the ocean.”

US Senate Democratic leader Chuck Schumer urged President Trump to release oil from the strategic reserve, while a French government source said on Monday that G7 countries will also discuss this option.

Production cuts among major producers

Saudi Aramco has begun reducing production at two of its oil fields, according to informed sources. Analysts had already warned last week that major OPEC producers, including the United Arab Emirates, might soon need to cut output as storage facilities fill up.

Oil production in Iraq from its main southern fields has also fallen by 70% as storage capacity reached its limits.

Kuwait Petroleum Corporation also began cutting production on Saturday and declared force majeure on shipments, without specifying the volume of output that would be halted.

In an attempt to deal with the closure of the Strait of Hormuz, Saudi Aramco offered more than 4 million barrels of Saudi crude in rare tenders, using the ability to redirect some exports through the Red Sea port of Yanbu.

Disruptions in gas and refining sectors

In gas markets, Qatar, the world’s largest exporter of liquefied natural gas, has already halted production after key infrastructure came under attack.

A fire also broke out in the Fujairah oil industrial zone in the United Arab Emirates after debris fell in the area, though no injuries were reported.

The supply crisis worsened with refining disruptions. Bahrain’s oil company declared force majeure after an attack on its refinery complex, while Saudi Arabia has already shut down its largest oil refinery.

Silver prices fell more than 5% in European trading on Monday, dropping below the $80 per ounce threshold, as the US dollar rose broadly in the foreign exchange market.

Rising energy costs have fueled concerns about accelerating inflation again across most of the world and have further reduced expectations for near-term interest rate cuts by the Federal Reserve.

Price Overview

Silver prices today: silver declined 5.7% to $79.65, down from the session opening level of $84.46, after reaching a high of $85.12.

At Friday’s settlement, silver rose 2.7%, marking the second gain in the past three days as prices recovered from a two-week low of $77.97 per ounce.

Last week, the white metal silver lost about 10%, marking its first weekly decline in three weeks as the US dollar strengthened amid the fallout from the Iran war.

US Dollar

The dollar index rose 0.85% on Monday to a four-month high of 99.70, reflecting broad strength in the US currency against a basket of global peers.

The rally comes as investors buy the US currency as a preferred safe-haven asset, with the Iran war entering its tenth day and signs growing of a broader military conflict in the Middle East, particularly after Mojtaba, Khamenei’s son, was selected as his successor — a move not welcomed in the United States.

Global oil prices

Global oil prices jumped about 30% on Monday, breaking above the $100 per barrel threshold for the first time since 2022 and approaching the $120 mark, as major oil producers in the Middle East cut supplies amid concerns that shipments through the Strait of Hormuz will remain disrupted.

US interest rates

According to the CME FedWatch tool from CME Group, markets are pricing a 98% probability that US interest rates will remain unchanged at the March meeting, while the probability of a 25-basis-point rate cut stands at 2%.

Markets are also pricing an 85% probability that rates will remain unchanged at the April meeting, while the chance of a 25-basis-point rate cut stands at 15%.

To reassess these expectations, investors are closely watching the release of key US inflation data for February later this week.

Gold prices fell more than 3% in European trading on Monday at the start of the week and may lose the ability to trade above the psychological $5,000 per ounce level, as the US dollar surged broadly in the foreign exchange market.

Rising energy costs have fueled concerns about accelerating inflation again across most of the world and have further reduced expectations for near-term interest rate cuts by the Federal Reserve.

Price Overview

Gold prices today: gold fell more than 3.0% to $5,014.90, down from the opening level of $5,171.83, after reaching a session high of $5,192.56.

At Friday’s settlement, gold prices rose 1.75%, marking the second gain in the past three days as prices recovered from a two-week low of $4,996.10 per ounce.

Last week, gold lost more than 2%, marking its first weekly decline in five weeks and the largest weekly drop since late December, as investors focused on buying the US dollar.

US Dollar

The dollar index rose 0.85% on Monday, reaching a four-month high of 99.70, reflecting broad strength in the US currency against a basket of major and secondary currencies.

As is well known, a stronger US dollar makes gold bullion priced in the currency less attractive to buyers holding other currencies.

The rally in the dollar comes as investors purchase the US currency as a preferred safe-haven asset, with the Iran war entering its tenth day and signs growing of a broader military conflict in the Middle East, particularly after Mojtaba, Khamenei’s son, was selected as his successor — a move not welcomed in the United States.

Global oil prices jumped about 30% on Monday, breaking above $100 per barrel for the first time since 2022 and approaching the $120 level, as major Middle Eastern oil producers cut supplies amid fears that shipments through the Strait of Hormuz will remain disrupted.

US interest rates

According to the CME FedWatch tool from CME Group, markets are pricing a 98% probability that US interest rates will remain unchanged at the March meeting, while the probability of a 25-basis-point rate cut stands at 2%.

Markets are also pricing an 85% probability that rates will remain unchanged at the April meeting, while the chance of a 25-basis-point rate cut is about 15%.

To reassess these expectations, investors are closely watching the release of key US inflation data for February later this week.

Gold outlook

Tim Waterer, chief market analyst at KCM Trade, said gold prices are falling today despite market turbulence because higher oil prices have strengthened the US dollar amid rising inflation concerns and reduced expectations for rate cuts.

He added that a large part of gold’s rally over the past twelve months had been based on expectations of looser US interest rate policy. However, with inflation risks increasing due to oil prices above $100 per barrel, rate cuts are no longer a certainty, and gold has begun to reprice accordingly.

SPDR fund

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.57 metric tons on Friday, marking the fourth consecutive daily decline and bringing total holdings down to 1,073.32 metric tons, the lowest level since January 12.

Crude oil prices jumped above $100 per barrel on Sunday after major producers in the Middle East cut production levels due to the continued closure of the vital Strait of Hormuz amid the war with Iran.

US West Texas Intermediate crude rose 18.98%, or $17.25, to reach $108.15 per barrel by 6:12 p.m. Eastern Time. Global benchmark Brent crude also climbed 16.19%, or $15.01, to $107.70 per barrel.

US crude had already surged about 35% last week, marking the largest weekly gain in the history of oil futures trading since contracts began trading in 1983.

The last time oil prices exceeded $100 per barrel was after the outbreak of the Russia–Ukraine war in 2022.

Production cuts in Gulf states

Kuwait, the fifth-largest producer in OPEC, announced on Saturday a precautionary reduction in oil production and refinery output due to what it described as “Iranian threats to the safety of ship transit through the Strait of Hormuz.”

The state-owned Kuwait Petroleum Corporation did not disclose the scale of the cuts.

In Iraq, the second-largest producer in OPEC, production has effectively collapsed, with output from the country’s three main southern oil fields dropping by 70% to about 1.3 million barrels per day, according to three industry officials who spoke to Reuters on Sunday.

These fields had previously produced about 4.3 million barrels per day before the war with Iran erupted.

The United Arab Emirates, OPEC’s third-largest producer, also announced on Saturday that it is “carefully managing production levels at offshore fields to meet storage requirements.”

Abu Dhabi National Oil Company said that its onshore operations continue to run normally.

Storage crisis and closure of the Strait of Hormuz

Arab Gulf states are cutting production due to a shortage of storage capacity, as oil shipments pile up without export destinations following the closure of the Strait of Hormuz.

Oil tankers are avoiding the narrow waterway out of fear of Iranian attacks. About 20% of global oil consumption passes through the strait.

War continues despite Trump remarks

The war shows no clear signs of easing, despite US President Donald Trump saying it has “effectively ended.”

Reports indicate that Iran has appointed Mojtaba Khamenei, the son of Supreme Leader Ali Khamenei, as the country’s new supreme leader after his father was killed in the early days of the war by US and Israeli forces.

Washington expects shipping to resume soon

US Energy Secretary Chris Wright said that ship traffic through the strait will resume once the United States succeeds in destroying Iran’s ability to threaten oil tankers.

He added in an interview with CNN that ship movements through the Strait of Hormuz could return more regularly soon.

He noted that shipping activity is still far from normal at present, explaining that a full recovery may take some time, but emphasized that even the worst-case scenario may last only a few weeks rather than months.