Global financial markets faced a seismic shock on Monday as the intensification of the conflict between the United States, Israel and Iran sent crude oil prices soaring above $120 per barrel.
The violent escalation, which has targeted critical energy infrastructure and effectively halted transit through the Strait of Hormuz, has triggered a wave of risk aversion across every major trading hub.
As Asian shares plunged and European markets opened deep in the red, US equity futures signalled a grim start to the week.
Investors are scrambling to price in the geopolitical chaos, with concerns mounting that the closure of the Strait, a waterway through which 20 per cent of the world’s oil supply flows, could push the global economy toward a period of stagflation.
“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,” warned Warren Hogan, an economic adviser at Judo Bank, as analysts highlighted that Brent crude has gained roughly 30 per cent this month alone, pushing its 2026 gains past 70 per cent.
The chaos has ignited a classic “flight to safety”, with the US dollar and the Swiss franc finding strong support as investors retreat from volatile equities.
In the commodity markets, oil prices jumped over 25 per cent following output curbs by Middle Eastern producers. The surge has brought back painful memories of 2022, when geopolitical tensions and supply chain disruptions caused global inflation to spike.
However, the rapid shift in sentiment is complicating the Federal Reserve’s path forward.
Recent data, according to ForexTime, a globally recognised online broker, showed a disappointing non-farm payrolls report for February, with a decline of 92,000 jobs and an uptick in the unemployment rate to 4.4 per cent.
“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,” noted Lee Hardman, a senior currency analyst at MUFG.
Market participants are currently pricing in only a 50 per cent chance of two rate cuts in 2026, as soaring energy costs force a reassessment of inflationary risks.
While global markets reel, commodity-producing nations are navigating a complex windfall.
In Nigeria, where oil accounts for the vast majority of export earnings, experts suggest that higher prices could bolster government revenue, provided the nation can manage the resulting inflationary pressures.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, cautioned that the domestic impact of global energy shocks is 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.”
As the world waits for incoming inflation data, specifically the February CPI and January PCE index, the future of the global bull market remains in question.
In the precious metals space, gold has struggled to gain traction despite the global uncertainty, trapped by a broadly stronger dollar.
Technical analysts are watching a critical threshold, with some warning that a weekly close below $5,000 per ounce could signal a steeper decline for gold, while others remain hopeful that the level will provide reliable support.
As major oil suppliers prepare to meet to discuss releasing strategic reserves, the global economy remains on a knife-edge, with the duration and scale of the conflict set to dictate the market trajectory for the remainder of the year.
