Global oil prices climbed to their highest levels in months as tensions between the United States and Iran intensified. The rally pushed Brent crude above $87 per barrel and triggered declines across major global stock markets. Higher energy prices could increase inflationary pressures in oil-importing countries, including Pakistan.
Brent crude rose $3.10, or 3.68%, to settle at $87.33 per barrel, its highest level in several months. Meanwhile, US West Texas Intermediate (WTI) crude gained $3.14, or 3.98%, to $82.09 per barrel. Investors reacted to escalating geopolitical risks following renewed military exchanges between Washington and Tehran.
The market rally followed reports of fresh US military strikes against Iran and Iran’s retaliatory attacks on American military facilities in Gulf countries and Syria. According to market analysts, fears of a broader regional conflict have raised concerns over potential disruptions to global energy supplies, particularly through the Strait of Hormuz.
Read more: US-Iran tensions push oil prices to months-high levels
Other energy benchmarks also recorded gains. Murban crude increased 3.91% to $80.77 per barrel, while WTI Midland advanced 3.10% to $81.81 per barrel. Additionally, US gasoline futures, Dutch TTF natural gas, US natural gas, and the Japan-Korea LNG benchmark all posted strong gains as traders priced in higher supply risks.
The surge in oil prices prompted investors to shift toward traditional safe-haven assets. Therefore, major equity markets came under pressure as concerns over inflation and slowing economic growth increased. Wall Street opened lower, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average trading in negative territory.
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European and Asian markets also weakened amid rising energy costs. Germany’s DAX and France’s CAC 40 declined, while Japan’s Nikkei 225, South Korea’s Kospi, and major Chinese indexes also fell. However, shares of major energy producers, including Shell and BP, outperformed as higher crude prices improved earnings expectations.
Pakistan could face significant economic challenges if oil prices remain elevated. Higher crude prices may increase the import bill, widen the current account deficit, accelerate inflation, and place additional pressure on the rupee and public finances. Analysts expect market volatility to continue until the regional security outlook becomes clearer.