Oil prices hit 5-month high amid conflict

Oil prices surged to their highest levels in five months, driven by escalating tensions in the Middle East and concerns over potential disruptions to oil supplies. The international benchmark Brent crude rose approximately 1.5% during Asian morning trading, reaching $78.53 per barrel, while U.S. crude also saw similar gains. Since the onset of the conflict on June 13, oil prices have increased by over 10%, with analysts warning that any Iranian action to disrupt shipping could push prices to $100 per barrel or higher.

The situation intensified following U.S. strikes on Iran's nuclear facilities, leading to reports that Iran's parliament has approved a measure to potentially close the Strait of Hormuz, a critical waterway through which about 20% of the world's oil is transported. Experts caution that while there are alternative pipeline routes, they would not sufficiently compensate for a halt in shipping through the strait.

Market reactions have been mixed, with Asian stock indices, including Japan's Nikkei, experiencing declines. However, analysts noted that there was no immediate panic selling in the markets. Optimism remains among some investors, who hope for a regime change in Iran that could lead to a more moderate government. Nonetheless, historical patterns suggest that upheaval in the region often results in significant spikes in oil prices.

Goldman Sachs has projected that a partial closure of the Strait could drive Brent prices toward $110 per barrel, with worst-case scenarios estimating prices could reach between $120 and $150 if disruptions persist. As geopolitical risks continue to rise, major oil-importing nations like Japan and South Korea have called for de-escalation, warning of potential trade and inflationary impacts. Overall, the market is bracing for further volatility as investors await Iran's next moves.