Oil prices jumped as much as 13 per cent as trading resumed amid a widening aerial conflict in the Middle East between Iran and the combined forces of the United States and Israel.

Brent crude, a key global benchmark for oil prices, surged as high as US$82.37 per barrel in early trade, the highest since January 2025. It pulled back a tad to trade at US$79.86 – still 9.5 per cent higher than the close on Feb 27 and up about 30 per cent since the start of 2026.

The US oil benchmark – West Texas Intermediate crude – rose 6.95 per cent to US$71.68 after touching US$75.33 earlier, the highest since June 2025.

Rallying crude prices represent the market’s concern about supplies coming through the Strait of Hormuz – a narrow waterway connecting the Persian Gulf to the Indian Ocean that handles a fifth of the world’s oil and large volumes of liquefied natural gas (LNG).

Some 15 million barrels of crude oil and 290 million cubic m of LNG pass through the strait each day from the Middle East to mainly Asia and Europe.

Analysts said tanker traffic through the strait has largely halted, with a self-imposed pause since the conflict began on Feb 28 as insurers warned shipowners that they would cancel policies and raise coverage prices for the region.

It comes as Iran retaliates against US-Israeli air strikes with missile and drone attacks on Israel and Arab states across the Middle East that host American military facilities.

The UK Maritime Trade Operations Centre has reported at least four incidents of vessels coming under attack from “unknown projectiles” since March 1 around Hormuz Strait.

While the Iranian authorities have said they do not intend to shut the waterway, ships in the area have reported hearing radio broadcasts stating that transit through Hormuz was banned.

Mr Max Layton, global head of commodities research at Citibank, said Brent is likely to trade in the US$80 to US$90 per barrel range over at least the coming week while the conflict is ongoing.

But in the case of a prolonged conflict, prices can surge to as high as US$120 a barrel, he added.

“Iran has not officially shut the Strait of Hormuz, but risk aversion from shippers is a real phenomenon. Transit volumes have already declined, with vessels parking outside the strait,” he said.

While constrained so far, attacks on the Omani tanker Skylight and on the United Arab Emirates’ (UAE) Abu Al Bukhoosh offshore platform highlight the risks towards oil asset targeting as well, Mr Layton said.

Meanwhile, OPEC+ – the oil exporters’ cartel that includes Saudi Arabia, the UAE and Russia – decided on March 1 to increase its crude oil production target by 206,000 barrels per day for April.

While the hike is 1½ times bigger than the 137,000-barrel increments made by the group in December, analysts said it is unlikely to calm markets in the immediate term.

Mr Jorge Leon, head of geopolitical analysis at research firm Rystad Energy, said markets are more concerned about whether barrels can move through Hormuz than with spare capacity on paper.

“If flows through the Gulf are constrained, additional production will provide limited immediate relief, making access to export routes far more important than headline output targets,” he said.

For Singapore, more expensive crude will result in higher prices of petrol for car owners.

Higher LNG prices will have an even wider impact, as the Republic produces the bulk of its electricity from natural gas.

While gas is pumped into Singapore mainly through pipelines from neighbouring countries, LNG has seen an increasing share in the mix, especially after the Republic made a long-term supply deal with Qatar – the Gulf state ranked as the world’s top LNG exporter.

Rystad estimates that based on 2025 trade flows, a complete closure of Hormuz and a breakdown of shipping in adjacent waters would see 97.7 million tonnes, or 363.8 million cubic m, per day of LNG from Qatar, the UAE and Oman removed from global markets.

This corresponds to 22 per cent of global LNG supply.

Mr Stephen Innes, managing partner at SPI Asset Management, said energy prices will remain volatile even if alternative supplies offer some cushion.

“Speculative positioning in oil has been building for weeks amid expectations that conflict in Iran would eventually flare. When a crowded trade gets the headline it was waiting for, the first move is higher.

“The second move can be profit-taking. But in these nervy war-torn conditions, oil markets rarely travel in straight lines,” he said.

IN ASSOCIATION WITH ANN