Oil prices rose on Monday as fresh Gulf attacks intensified supply fears, with Brent crude up 1.2% at $110.63 a barrel and US West Texas Intermediate up 1.0% at $106.42.
The gains followed a drone strike that sparked a fire at a nuclear power plant in the United Arab Emirates. Saudi Arabia also said it intercepted three drones.
Markets also reacted to rising concern over the Strait of Hormuz, where shipping disruption has increased pressure on global energy supply. The waterway normally carries about 20% of the global oil trade.
Capital Economics analysts said the disruption was draining global oil inventories and could push Brent to $130-$140 per barrel by the end of June if stocks reach critical levels.
The analysts said a year-end closure of the strait, with oil near $150 per barrel into 2027, could push inflation in the UK and the euro zone close to 10% and raise recession risks.
Higher energy prices also pressured bond markets. US 10-year Treasury yields rose to 4.584%, while 30-year yields stood at 5.109%.
G7 finance ministers will meet in Paris on Monday to discuss the Strait of Hormuz and critical raw material supply chains.
Asian equities weakened, with Japan’s Nikkei down 0.4%, South Korea’s market off 2.1% and MSCI’s Asia-Pacific index outside Japan down 0.6%. US stock futures also fell in early trading.
