Oil prices continue to soar after US strikes on Iran

Oil prices surged in early trade Monday on concerns of disruption to energy markets after US air strikes on Iran's nuclear facilities. Oil tankers pass through the Strait of Hormuz, (REUTERS)
Asian stocks were lower as traders digested the weekend's events, with Iran threatening US bases in the Middle East as fears grow of an escalating conflict in the volatile region. Follow LIVE updates here
Iran is the world's ninth-biggest oil-producing country, with output of about 3.3 million barrels per day.
It exports just under half of that amount and keeps the rest for domestic consumption.
And if Tehran decides to retaliate, observers say one of its options would be to seek to close the strategic Strait of Hormuz -- which carries one-fifth of global oil output.
As trading opened on Monday, Brent and the main US crude contract WTI both jumped more than four percent to hit their highest price since January.
They pared these gains, however and at around 0030 GMT Brent was up 2.2 percent at $79.20 per barrel and WTI was 2.1 percent higher at $75.98.
Economists at MUFG warned of "high uncertainty of the outcomes and duration of this war", giving a "scenario analysis" of an oil price increase of $10 per barrel.
"An oil price shock would create a real negative impact on most Asian economies" as many are big net energy importers, they wrote, reflecting the market's downbeat mood.
Tokyo's key Nikkei index was down 0.6 percent while Seoul fell 1.4 percent and Sydney was 0.7 percent lower.
US Defense Secretary Pete Hegseth said Sunday that the strikes had "devastated the Iranian nuclear programme", though some officials cautioned that the extent of the damage was unclear.
It comes after Israel launched a bombing campaign against Iran earlier this month.
Chris Weston at Pepperstone said Iran was able to inflict economic damage on the world without taking the "extreme route" of trying to close the Strait of Hormuz.
"By planting enough belief that they could disrupt this key logistical channel, maritime costs could rise to the point that it would have a significant impact on the supply of crude and gas," he wrote in a note published Monday.
At the same time, "while Trump's primary focus will be on the Middle East, headlines on trade negotiations could soon start to roll in and market anxieties could feasibly build", he added.

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