Global oil prices climbed sharply on Monday after fresh drone attacks in the United Arab Emirates and Saudi Arabia intensified fears of wider supply disruptions and potential shortages in global energy markets.
Brent crude futures rose above $110 per barrel while US West Texas Intermediate crossed $108 as traders reacted to escalating geopolitical tensions and uncertainty surrounding the Strait of Hormuz.
The latest surge followed reports of a drone strike near the Barakah nuclear power plant in the UAE. Emirati authorities said the attack caused a fire near an electrical generator outside the facility’s inner perimeter.
Saudi Arabia also confirmed intercepting three drones that entered its airspace from Iraq.
Oil markets remained under pressure after US President Donald Trump’s recent visit to China failed to produce any diplomatic breakthrough regarding Iran or efforts to fully reopen the Strait of Hormuz for unrestricted trade flows.
Analysts warned that continued tensions could significantly tighten global crude supplies as physical oil markets are already experiencing falling inventories and increased strain on emergency reserves.
According to the International Energy Agency, global oil markets could face a supply gap of nearly 6 million barrels per day between March and June if disruptions persist.
Top venture capital firms in the West are evaluating scenarios where Brent crude could surge as high as $180 per barrel if shipping constraints around the Strait of Hormuz continue for an extended period.
JPMorgan analysts have also warned that OECD oil inventories may soon approach operational stress levels, increasing the risk of more severe price spikes and physical shortages in global energy markets.
Malik Haroon