US and Israeli military strikes on Iran over the weekend set in motion a sequence of events that produced the largest single-day move in oil prices in several years, as markets priced in the full severity of the resulting supply disruption. Brent crude surged as much as 13% on Monday — a move of a magnitude rarely seen in normal market conditions — before pulling back somewhat to end the session approximately 6% higher at around $77 a barrel.
The scale of the oil price move reflected the seriousness of the supply disruption triggered by the strikes. Iran reportedly responded by warning tankers against transiting the Strait of Hormuz, through which roughly one-fifth of global oil supplies flow. Two commercial ships were subsequently attacked in the strait. Tankers piled up on both sides of the waterway, unable to proceed. Major shipping company Maersk suspended all transits through both the strait and the Suez Canal.
The supply disruption was compounded by the shutdown of Qatar’s LNG production following drone attacks on its major facilities. While LNG and oil are traded on different markets, the combination of disrupted LNG supply and blocked oil shipping sent a powerful signal to energy markets about the scale of the overall supply shock. Gas prices surged 40% or more in Europe, adding to the broader energy market crisis.
The 13% intraday spike in oil prices reflected initial market panic as traders rapidly assessed the potential scale of the supply disruption. As the session progressed and the full dimensions of the crisis became clearer, some of the initial panic premium was unwound, allowing prices to settle somewhat lower. However, the underlying supply disruptions that drove the spike remain in place, suggesting that elevated prices could persist for as long as the conflict continues.
Energy analysts pointed out that the oil market’s response to the strikes was amplified by the low level of market complacency heading into the crisis. With inventories already relatively lean and OPEC+ spare capacity essentially inaccessible behind the Hormuz blockade, the market had limited buffers to absorb a supply shock of this magnitude. The result was a rapid and dramatic price adjustment that illustrated both the sensitivity of oil markets to geopolitical developments and the limited resilience of current supply arrangements.