US Israel Iran war: Will oil prices rise on Monday? Here’s what we know

Oil prices may rise on Monday as the ongoing conflict between the US and Israel with Iran continues to disrupt supply and keep the Strait of Hormuz closed. The conflict also involved US strikes on military assets on Kharg Island and Iranian drone attacks on an oil terminal in the United Arab Emirates, affecting the energy sector directly.

This Hormuz closure is one of the largest interruptions to global oil flows in recent times. Meanwhile, the recent escalation has unsettled global markets, with Brent and US West Texas Intermediate crude futures increasing by over 40 per cent this month to their highest levels since 2022. 

JP Morgan analysts, led by Natasha Kaneva, said, “This marks an escalation in the conflict,” and noted that until now, the region’s oil infrastructure had largely been spared. 

Industry experts have pointed out the UAE’s Fujairah, Saudi Arabia’s Ras Tanura export terminal, and the Abqaiq processing facilities as critical and vulnerable energy sites. Disruptions at these locations could significantly impact oil supply.

Despite recent attacks, oil loading operations at Fujairah have resumed, according to a Fujairah-based industry source. Fujairah handles about 1 million barrels per day of the UAE’s Murban crude oil, which is roughly 1 per cent of global demand.

The International Energy Agency (IEA) stated that global oil supply is expected to fall by 8 million barrels per day in March due to shipping disruptions, while Middle Eastern producers have cut output by at least 10 million barrels per day. These figures show the scale of current supply challenges.

To stabilise prices, the IEA agreed to release a record 400 million barrels of oil from strategic stockpiles held by member nations. Japan is scheduled to begin releasing its reserves on Monday.

Diplomatic efforts to resolve the crisis have stalled. Sources familiar with the talks said the Trump administration has rejected efforts by West Asian allies to start negotiations, while Iran has refused any ceasefire until US and Israeli strikes end. These positions reduce the chances of a near-term resolution.

With the Strait of Hormuz still closed and military tensions high, oil market participants will closely watch developments as the new trading week begins.