Oil Surge: Impacts on Global Markets Amid Middle East Tensions

Brent crude oil has risen by 20% in June, the largest monthly increase since 2020, driven by Israel/Iran tensions. The rise prompts global economic concerns, as high oil prices can increase inflation and dampen growth. Key areas affected include shipping routes, currency markets, and stock market behavior.

Brent crude oil prices have escalated by 20% this June, marking the steepest monthly rise since 2020 due to escalating Israel/Iran tensions. Although oil flows remain steady, the increase is reminiscent of price surges post-Russia's Ukraine invasion, threatening global economic stability through heightened inflation and interest rates hikes.

Investors are wary of potential disruptions to Middle East supply routes, with the Brent crude futures contract reaching a six-month premium high. The possibility of blocked shipping routes in the Hormuz Strait, a major oil conduit, poses risks of pushing oil prices beyond $100 a barrel, further straining economic growth.

The upward trajectory of oil prices impacts various sectors, from elevating inflation to affecting currency strength. Economists warn that persistent prices over $100 could detract 1% from global growth, while oil-importing regions brace for economic strain. Meanwhile, stock markets exhibit resilience, with U.S. and European energy shares outperforming amid these volatile circumstances.

(With inputs from agencies.)