Brent crude tops $90 as US-Iran conflict fuels oil stock rally

Brent crude surged past $90 a barrel as the escalating US-Iran conflict threatened critical oil shipping routes in the Middle East.

Brent crude futures broke above $90 a barrel for the first time since the conflict's initial shock, as the intensifying US-Iran military campaign raised the risk of disruptions to shipping through the Strait of Hormuz and the Red Sea. The benchmark has more than doubled since the US-Israeli offensive against Iran began on Feb. 28, climbing from about $45 to above $114 at its peak before settling back above $90.

"Oil markets are pricing in a meaningful supply disruption premium as the conflict expands beyond direct military engagement to threaten critical chokepoints," said Omar Tariq, senior commodities analyst at Edgen.

The rally cascaded through Hong Kong-listed energy stocks. CNOOC Ltd. jumped 5.55% to HKD 23.98, PetroChina Co. added 4.48% to HKD 10.02, and Sinopec Corp. rose 1.41% to HKD 4.32. Oilfield services stocks outperformed, with Shandong Molong Petroleum Machinery Co. surging 11.72% to HKD 6.48, China Oilfield Services Ltd. gaining 4.73% to HKD 7.08, and Sinopec Oilfield Service Corp. climbing 6.56% to HKD 0.65.

The sustained rally is fueling inflation concerns globally, with pump prices rising to politically sensitive levels. The US national average gasoline price has climbed past $4.50 a gallon, approaching the 2022 peak that prompted the Biden administration to release strategic petroleum reserves. Gold has dropped 28% from its January peak to $4,000 an ounce as the oil surge stokes expectations that the Federal Reserve may need to resume rate hikes, tightening financial conditions across emerging markets.

Supply Risks Reshape the Demand Outlook

The conflict's impact extends beyond spot prices. Brent's doubling since late February has already pushed retail fuel costs to levels that historically trigger political backlash in consuming nations. For oil-exporting countries in the Middle East, higher prices boost fiscal revenues, but the risk of infrastructure damage and shipping disruptions threatens long-term production capacity. Iran's output, which had recovered to about 3.5 million barrels a day before the conflict, has been partially disrupted by the campaign.

The last time Brent traded above $90 for a sustained period was in the second half of 2022, following Russia's invasion of Ukraine. That episode saw US inflation peak above 9% and prompted the most aggressive Federal Reserve tightening cycle in four decades. The current trajectory suggests a similar pattern may unfold, with the International Energy Agency warning that sustained prices above $100 could reduce global oil demand growth by 500,000 barrels a day.

This article is for informational purposes only and does not constitute investment advice.