Crude oil prices recorded gains exceeding 7% at the start of the week’s trading in the European session on Monday, March 2nd, after rising by more than 12% at the opening of Asian markets. This surge was fueled by escalating geopolitical tensions in the Middle East and the war that erupted over the weekend following an Israeli and US attack on Iran that resulted in the death of Supreme Leader Ali Khamenei. Iran retaliated with a broader offensive targeting several Middle Eastern countries, further increasing market uncertainty. US crude (WTI) rose by approximately 7.43%, trading at around $72.00 per barrel, while Brent crude traded at around $78.47 per barrel, up by approximately 7.73%.

Investors and traders in the energy markets are closely monitoring developments and assessing the impact of these attacks on the Strait of Hormuz. This comes after the disruption of oil tanker traffic through the Ras Tanura strait, the waterway off the coast of Iran through which one-fifth of the world’s oil production passes. While Iranian authorities have declared the Strait of Hormuz open, ship owners have reported a near-complete halt in traffic. Some reports indicate a buildup of oil tankers on both sides of the strait, fearing an attack, especially given Trump’s statements suggesting that military operations will continue until all objectives are achieved.

Iran pumps approximately 3.3 million barrels per day, or about 3% of global oil production. However, its strategic location through the Strait of Hormuz, a vital oil transit route from the Gulf, amplifies the impact of this conflict on crude oil prices.

Goldman Sachs, in a research note released this morning, indicated that Brent crude could reach $80 per barrel in the second quarter, compared to its previous estimate of $62.50. Analysts at Citigroup expect Brent crude prices to range between $80 and $90 next week.