Oil prices continued to rise on Monday as Brent crude headed for a record monthly gain, after Yemeni Houthis launched their first attacks on Israel over the ‌weekend, widening the U.S.-Israel war with Iran in the Middle East.

Brent crude futures jumped $3.94, or 3.5%, to $116.51 a barrel at 0703 GMT after settling 4.2% higher on Friday. U.S. West Texas Intermediate was at $102.14 a barrel, up $1.86, or 1.87%, following a 5.5% gain in the previous session.

Global stocks, meanwhile, were in limbo as investors dug in for a conflict they fear will bring a spike in inflation ⁠and the risk of recession to much of the globe.

“The market has all but discounted the prospect of ​a negotiated end to the war, (U.S. President Donald) Trump’s claims of ongoing ‘direct and indirect’ talks with Iran notwithstanding, and is bracing for ​a sharp escalation in military hostilities, which is a bullish signal for crude, with huge uncertainties on ⁠the timing and nature of the outcome,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Trump said ​the U.S. and Iran have been meeting “directly and indirectly” and that Iran’s new leaders have been “very reasonable,” as more U.S troops arrived in ​the region, while the Israeli military said on Monday it is attacking the Iranian government’s infrastructure throughout Tehran.

Brent has soared 59% this month, the steepest monthly jump, exceeding gains seen during the 1990 Gulf War, after the Iran conflict effectively closed the Strait of Hormuz, a conduit for a fifth of the world’s ​oil and gas supplies.

The war, launched on Feb. 28 with U.S. and Israeli strikes on Iran, has spread across the Middle East, ​raising concern about shipping lanes around the Arabian Peninsula and the Red Sea.

The Financial Times late on Sunday quoted Trump saying the U.S. ​could ⁠seize Kharg Island in the Persian Gulf, from where Iran exports much of its oil, but also that a cease-fire could come quickly.

The Israeli military on Monday said Iran launched multiple waves of missiles at Israel ‌and an ⁠attack had also been launched from Yemen for only the second time since the war began.

“The conflict is no longer concentrated in the Persian Gulf and around the Strait of Hormuz, but now extends into the Red Sea and the Bab el-Mandeb – one of the world’s most crucial chokepoints for crude and refined product flows,” JPMorgan analysts led by Natasha Kaneva said in a note.

Saudi crude exports ​redirected from the Strait of ​Hormuz to the Yanbu port ⁠in the Red Sea reached 4.658 million barrels per day last week, data from analytics firm Kpler showed.

If exports from Yanbu were disrupted, Saudi oil would need to pivot toward Egypt’s Suez-Mediterranean (SUMED) pipeline to ​the Mediterranean, JPMorgan analysts said.

Attacks in the region escalated over the weekend and damaged Oman’s Salalah ​terminal despite efforts ⁠to start cease-fire talks.

Pakistan said it was preparing to host “meaningful talks” to end the conflict over Iran in the coming days, even though Tehran accused Washington of preparing a land assault as the U.S. military builds up forces in the region.

Separately, Vietnam’s Binh Son ​Refining and Petrochemical on Monday said it is in talks with Russian partners to buy crude oil. The company said it would also buy more crude oil from Africa, ​the U.S. and Southeast Asia.

Stocks in limbo

Meanwhile, shares across ⁠Asia fell, with Japan’s Nikkei index closing down 2.8%, in a region more reliant on Gulf oil exports. European stock markets were firmer in early trading and Wall Street futures pointed to gains, although they were slim given a recent sell-off.

“Oil is the lightning rod right now,” said Eren Osman, managing director of wealth management at Arbuthnot Latham, adding a reopening of the Strait of Hormuz was the key to calming world markets.

“The biggest challenge for us as investors today is that you’ve got one of the widest ranges of potential outcomes,” he said, adding he did not expect a prolonged conflict as he believed Trump had a “pain threshold” for market losses.

Madison Cartwright, senior geo-economics analyst at Commonwealth Bank of Australia, said Iran’s control of the Strait of Hormuz nonetheless gave it little incentive to concede and the bank expected the war to run until at least ⁠June.

The ⁠clampdown on the Strait has sent prices for oil, gas, fertilizer, plastic and aluminium surging, along with fuel for planes and shipping. Prices for food, pharmaceuticals and petrochemical products are all set to rise.

That is particularly bad news for Asia, as much of the region is highly dependent on energy from the Middle East.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.8%.

European stocks were last up 0.3%, while S&P 500 futures and Nasdaq futures pointed to gains of about 0.5% apiece.

“The longer the Strait remains closed, the sharper the drawdown in buffer supplies that could spark dramatic increases in the price of crude oil, natural gas and other commodities,” warned Bruce Kasman, global head of economics at JPMorgan.

“A scenario in which the Strait remains closed for an additional month would be consistent with ⁠oil prices rising towards $150/bbl and constraints on industrial consumers of energy supply.”

Fed in focus as payrolls loom

The inflationary threat has led investors to ​revise up the outlook for interest rates almost everywhere. U.S. Federal Reserve (Fed) Chair Jerome Powell will have a chance to air his own views at ​an event later on Monday and the influential head of the New York Fed, John Williams, is also talking.

Data on U.S. retail sales, manufacturing and payrolls this week will provide an update on how the economy is faring. The energy shock, combined ⁠with pressure on ‌fiscal budgets from higher ‌borrowing costs and the need for more defence spending, has hit sovereign bond markets. Ten-year ⁠U.S. Treasury yields were last at 4.3959%.

Heightened volatility in markets has tended to benefit ‌the U.S. dollar as the world’s most liquid currency. The U.S. is also a net energy exporter, giving it a relative advantage over Europe and much of Asia.

The dollar index ​was trading near a 10-month high at 100.26, broadly ⁠flat on the day. Yet more warnings of possible intervention from the Japanese authorities did see the ⁠dollar ease 0.3% to 159.775 yen. It crossed the 160 barrier last week for the first time since July 2024, when Japan last ⁠acted to buy yen.

The euro ​dipped 0.1% to $1.1493, not far from a March trough of $1.1409.

In commodity markets, gold gained 0.9% to $4,534 an ounce, having recently drawn scant support as a safe haven or as a hedge against inflation risks.

The Turkish economic confidence index decreased 2.8% month-over-month to 97.9 in March, according to the official data released by the country’s statistical office on Monday.

The index stood at 100.7 in February and 99.4 in January, according to the Turkish Statistical Institute (TurkStat).

All sub-indices posted declines in March, with the real sector and construction confidence indexes both dropping 3.9%.

Consumer confidence edged down 0.8%, while services and retail trade confidence indices fell 0.5% and 2%, respectively.

The economic confidence index, a composite indicator of the country’s overall economic situation, indicates an optimistic outlook when above 100 and a pessimistic one when below 100.

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Iran plans to overhaul the governance of the Strait of Hormuz to secure long-term economic and security advantages, Vice President Mohammad Reza Aref said Sunday.

“The Strait of Hormuz regime will no longer be as it was in the past,” Aref wrote on X, adding that the government aims to “transform the battlefield achievements into sustainable economic and security benefits for the country.”

He said efforts by Iran’s opponents to bring about political change in Iran had merely led to “regime change in Hormuz.”

According to Iranian sources, future transit through strait could be restricted to ships whose owners are not involved in the war against Iran, while ships linked to states or actors that Tehran regards as supporters of the war would be barred.

The Iranian parliament is also planning legislation to introduce a toll system for the waterway, the sources said.

The Strait of Hormuz has become a focal point in the current US-Israeli war with Iran. Tehran has repeatedly attacked vessels in the waterway, effectively closing off a key shipping route for global oil and gas supplies.

The narrow passage between Iran and Oman is the only link between the Gulf and the world’s oceans and is regarded as one of the most important shipping routes globally, with around 20% of the world’s oil supply normally passing through it.

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Threats to ships in the crucial Strait of Hormuz amid war in Iran and broader regional conflict significantly raised payments for the insurance that underpins the global freight industry.

Here are facts and figures about how maritime insurance works, and the impact from the war sparked by U.S.-Israeli strikes on Iran, which has virtually cut off shipping in the strait.

Insurance available

After the fighting broke out on Feb. 28, some insurers served so-called cancellation notices for war risk policies to “reassess … and then reinstate that cover at adjusted terms,” the International Union of Marine Insurance (IUMI) said in a statement.

Despite the name, “a ‘Notice of Cancellation’ does not, necessarily, end the cover. War cover remains available for owners and operators wishing to take it.”

Executives in London, the world’s top shipping insurance market, insisted that captains were avoiding the route to protect their crews, not because they could not get insured.

“Safety concerns, not insurance availability, (are) driving reduced vessel traffic,” headlined the Lloyd’s Market Association (LMA), a trade body for the London ship insurance industry, in a report.

The price of such policies to cross the strait has shot up, however, according to industry players.

Surging premiums

Before the current Middle East conflict, a war risk premium would typically have cost less than 1% percent of the vessel’s so-called hull value.

Now, war risk insurance could run into tens of millions of dollars for a single trip through the Hormuz Strait.

Premiums have surged for ships seeking special cover to cross the strait, according to Robert Peters of U.K. maritime consultancy Ambrey, which has an insurance arm.

“I’m not sure the market has settled on an agreed range,” he added, noting figures typically range “from 5% down to 1%.”

David Smith, head of the marine arm at specialist insurance broker McGill, meanwhile, estimated it at “anywhere between three and-a-half and 10%.”

“It is going up and down almost on an hourly basis,” he told Agence France-Presse (AFP).

Cargo insurance rates have followed the same trajectory.

“A brand new LNG (liquefied natural gas) ship could be worth $200 million to $250 million alone, and then a cargo could be worth the same again,” Smith noted.

Fivefold cover

Commercial ships typically need several separate insurance policies.

Hull cover insures against loss or damage to the vessel, while protection and indemnity (P&I) acts like third-party liability coverage.

The cargo on board, from petrochemicals to containers, also requires insurance.

In addition, ships need war risk insurance, typically an annual premium, but that does not cover ships entering the most active conflict zones, known as “listed” areas.

To do that, they must renegotiate another war risk premium.

“The annual (war risk) premium is not designed for a crisis,” said Neil Roberts, head of marine and aviation at the LMA.

Danger zones list

In early March, London’s marine insurance market widened the “listed” areas in the Gulf region.

The system “enables underwriters to respond quickly and proportionately to areas of increased risk,” said Roberts, who sits on the committee that updates the list.

To price war risk premiums, underwriters are considering numerous factors such as the type, flag and owner of the vessel, as well as its size, speed and cargo.

“We have seen some quotes where the underwriter has actually warranted that the vessel goes through at… full throttle,” said Smith.

“That is deemed to be an improvement in the risk factor.”

No buyers

Ships normally have 24 hours to buy insurers’ quotes for listed area entry, but that has narrowed to 12 hours for Hormuz, Smith said.

“You line your ship up, you turn the engine on, you get ready to make a charge, then you’ll get your quote,” he said.

But currently “no one is buying,” he added, saying one underwriter reported to him less than 1% uptake for Hormuz-related policies.

U.S. insurance scheme

A U.S. shipping insurance initiative to boost Hormuz crossings will begin operating soon, Treasury Secretary Scott Bessent said Thursday.

U.S. President Donald Trump previously announced the scheme would involve naval escorts and urged Western and other powers to step up. But they have proved unwilling while the conflict rages.

If a crossings framework with military protection could be agreed and proven effective, insurance “rates would tumble very, very quickly,” Smith predicted.

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U.S. and Israeli attacks on Iran have pushed prices up, clouded the outlook for the global economy, sent global stock markets crumbling and forced both developed and developing countries to step in with measures including rationing of fuel and subsidizing the energy costs to protect the most vulnerable.

Ongoing strikes and counterstrikes on Persian Gulf refineries, pipelines, gas fields and tanker terminals threaten to prolong the global economic pain for months, even years.

“A week ago or certainly two weeks ago, I would have said: If the war stopped that day, the long-term implications would be pretty small,’’ said Christopher Knittel, an energy economist at the Massachusetts Institute of Technology.

“But what we’re seeing is infrastructure actually being destroyed, which means the ramifications of this war are going to be long-lived.”

Iran hit Qatar’s Ras Laffan natural gas terminal, which produces 20% of the world’s liquefied natural gas (LNG). The March 18 strike wiped out 17% of Qatar’s LNG export capacity and repairs will take up to five years, state-owned QatarEnergy said.

The war caused an oil shock from the get-go. Iran responded to U.S. and Israeli attacks, which commenced on Feb. 28 by effectively closing off the Strait of Hormuz, a transit point for a fifth of the world’s oil, by threatening tankers trying to pass through.

Gulf oil exporters like Kuwait and Iraq cut production because there was nowhere for their oil to go without access to the strait.

The loss of 20 million barrels of oil a day delivered what the International Energy Agency (IEA) calls the “largest supply disruption in the history of the global oil market.’’

The price for a barrel of Brent crude oil climbed 3.4% on Friday to settle at $105.32. That was up from roughly $70 just before the war began. Benchmark U.S. crude rose 5.5% to settle at $99.64 per barrel.

‘Global recessions’ risk

“Historically, oil price shocks like this have led to global recessions,” Knittel said.

The war has also dredged up a bad economic memory from the oil shocks of the 1970s: stagflation.

“You’re raising the risk of higher inflation and lower growth,” said the Harvard Kennedy School’s Carmen Reinhart, a former World Bank chief economist.

Gita Gopinath, former chief economist at the International Monetary Fund (IMF), recently wrote that global economic growth, expected before the war to register 3.3% this year, would be 0.3 to 0.4 percentage points lower if oil prices averaged $85 a barrel in 2026.

The Persian Gulf accounts for a big share of exports of two key fertilizers, a third of urea and a quarter of ammonia. Producers in the region enjoy an advantage: easy access to low-cost natural gas, the primary feedstock for nitrogen fertilizers.

Up to 40% of world exports of nitrogen fertilizer pass through the Strait of Hormuz.

Urea, ammonia prices shoot up

Now that the passage is blocked, urea prices are up 50% since the war and ammonia 20%.

Big agricultural producer Brazil is especially vulnerable because it gets 85% of its fertilizer from imports, Alpine Macro commodity strategist Kelly Xu wrote in a commentary.

Egypt, a big fertilizer producer itself, needs natural gas to make the stuff and production falters when it can’t get enough.

Eventually, higher fertilizer prices are likely to make food more expensive and less abundant as farmers skimp on it and get lower yields. The squeeze on food supplies will land hardest on families in poorer countries.

The war has also disrupted world supplies of helium, a byproduct of natural gas and a key input in chipmaking, rockets and medical imaging. Qatar makes helium at the Ras Laffan facility and supplies a third of the world’s helium.

“No country will be immune to the effects of this crisis if it continues to go in this direction,” IEA head Fatih Birol said on March 23.

Poorer countries will be hit hardest and face the biggest energy shortages “because they will be outbid when competing for the remaining oil and natural gas,” said Lutz Kilian, director of the Center for Energy and the Economy at the Federal Reserve Bank of Dallas.

Asia thin-skinned

Asia is especially exposed: More than 80% of the oil and LNG that passes through the Strait of Hormuz is headed there.

In the Philippines, government offices are now open just four days a week and bureaucrats must limit the use of air conditioning to nothing cooler than 75°F (24°C). In Thailand, public workers have been told to take the stairs instead of elevators.

India is the world’s second-biggest importer of liquefied petroleum gas (LPG), which is used in cooking. The Indian government is giving households priority over businesses as it allocates its limited supply and absorbing most of the price increases to keep costs low for poor families.

But LPG shortages have forced some eateries to shorten hours, close temporarily or drop dishes like curries and deep-fried snacks requiring a lot of energy.

South Korea, dependent on energy imports, is restricting the use of cars by public employees and has reinstated fuel price caps that had been dropped in the 1990s.

The United States, the world’s largest economy, is somewhat insulated.

America is an oil exporter, so its energy companies stand to benefit from higher prices. And LNG prices are lower in the U.S. than elsewhere because its export liquefaction facilities already are running at 100% capacity. The U.S. can’t export any more LNG than it already is, so gas stays home, keeping domestic supplies abundant and prices stable.

Still, higher gasoline prices are weighing on American consumers already frustrated by the high cost of living. According to AAA, the average price of a gallon of gasoline has risen to nearly $4 a gallon from $2.98 a month ago.

U.S. economy

“Nothing weighs more heavily on consumers’ collective psyche than having to pay more at the pump,” Mark Zandi, chief economist at Moody’s Analytics, and his colleagues wrote in a commentary.

The U.S. economy already was showing signs of weakness, expanding an annual pace of just 0.7% from October through December, down from a rollicking 4.4% from July through September.

Employers unexpectedly cut 92,000 jobs in February and added just 9,700 a month in 2025, the weakest hiring outside a recession since 2002.

Gregory Daco, chief economist at EY-Parthenon, has raised the odds of a U.S. recession over the next year to 40%. The risk when times are “normal” is just 15%.

The world economy has proven resilient in the face of repeated shocks: a COVID-19 pandemic, Russia’s invasion of Ukraine, resurgent inflation and the high interest rates needed to bring it under control.

So there was optimism that it could shrug off the damage from the Iran war. But those hopes are fading as the threats to the Gulf’s energy infrastructure continue.

“Some of the damage to LNG facilities in Qatar done will likely take years to repair,” said the Dallas Fed’s Kilian, who also noted necessary repairs to refineries in countries like Kuwait and tankers in the Gulf that must be re-provisioned and stocked up with marine fuel.

“The process of recovery will be slow even under the best circumstances.”

“There is no economic upside to the conflict with Iran,” Zandi and his colleagues wrote.

“At this point, the questions are how much longer the hostilities will continue and how much economic damage they will cause.”

China wishes to strengthen economic cooperation with the United States to avoid “vicious competition”, Commerce Minister Wang Wentao told U.S. Trade Representative Jamieson Greer, according to a readout released on Friday.

The two met on Thursday on the sidelines of a World Trade Organization (WTO) ministerial conference in Cameroon’s capital, less than two months ahead of U.S. President Donald Trump’s planned visit to Beijing.

“China is willing to strengthen multilateral and regional economic and trade cooperation with the United States,” Wang told Greer, according to a statement by the Beijing’s Ministry of Commerce.

The two powers must “properly handle the relationship between competition and cooperation” and “avoid vicious competition,” he said.

The world’s two largest economies were locked in a bitter trade battle last year before agreeing to a truce in October.

High-level talks in Paris this month between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng also helped to ease tensions.

Nevertheless, issues including U.S. tariffs, a trade balance in China’s favor, and U.S. restrictions on exports of advanced technologies continue to threaten relations.

Wang expressed “grave concerns” on Thursday regarding recently announced U.S. trade investigations signaling the possibility of fresh tariffs.

Washington’s trade investigations target 60 economies, including China, and will look into “failures to take action on forced labor” and whether these burden or restrict U.S. commerce.

The White House has said Trump will visit Beijing on May 14-15, with the timing postponed by several weeks as a result of the war in the Middle East.

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