Global financial markets were thrown into turmoil on Monday after escalating hostilities involving the United States, Israel, and Iran drove crude oil prices above $120 per barrel.
The sharp surge in energy prices followed attacks on critical energy facilities in the Middle East and the effective shutdown of shipping activity through the Strait of Hormuz, a strategic waterway responsible for roughly 20 percent of global oil supply.
The developments sparked widespread panic across financial markets. Asian equities dropped sharply while European stocks opened significantly lower. Meanwhile, futures for US equities signalled a potentially difficult start to the trading week as investors reassessed geopolitical risks.
Market analysts warn that disruptions to oil supply could significantly strain the global economy.
“There’s a good chance that we’re seeing one of the most sudden increases in the cost of oil to the global economy ever,” said Warren Hogan, an economic adviser at Judo Bank.
Data from market analysts shows Brent crude has climbed about 30 percent in the past month, pushing its overall gains for 2026 beyond 70 percent.
The surge in geopolitical tensions has also triggered a classic “flight to safety” among investors. Demand for traditionally safe assets such as the US dollar and the Swiss franc increased as traders moved away from riskier investments like equities.
Commodity markets reacted sharply to the crisis. Oil prices jumped more than 25 percent following production restrictions from several Middle Eastern suppliers, reviving memories of the energy price spikes that fuelled global inflation in 2022.
However, the situation is complicating monetary policy decisions in the United States.
Recent economic data cited by ForexTime showed weakness in the US labour market. The February non-farm payroll report revealed a loss of 92,000 jobs, while the unemployment rate climbed to 4.4 percent.
“The combination of a still-weak US labour market and an energy price shock is putting the Fed in an even more difficult position when setting policy,” said Lee Hardman, a senior currency analyst at MUFG.
Investors are now reassessing expectations for interest rate cuts, with markets pricing only a 50 percent probability of two rate reductions in 2026.
While the global outlook remains uncertain, commodity-exporting countries could see mixed outcomes from the oil price surge.
For Nigeria, where crude oil exports represent a significant share of government revenue, higher prices may increase fiscal earnings. However, economists warn that rising energy costs could worsen domestic inflation.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said the impact on households could be immediate.
“Energy costs have a strong multiplier effect. Rising pump prices feed directly into food distribution and manufacturing. Inflationary pressure intensifies, and households feel it immediately.”
Meanwhile, investors are awaiting new inflation indicators, including the February Consumer Price Index and January Personal Consumption Expenditures data, which could influence the next moves by global central banks.
With major oil producers now considering the possible release of strategic reserves, analysts say the duration and intensity of the conflict will likely determine the direction of financial markets in the months ahead.
