Oil markets moved sharply higher on Monday as the International Energy Agency (IEA) warned the unfolding Middle East crisis is “very severe,” with disruption risks exceeding those seen during the oil shocks of the 1970s.
IEA Executive Director Fatih Birol said the agency is consulting with Asian and European governments on whether to release additional strategic stockpiles, as the Strait of Hormuz remains effectively closed.
Birol stressed that reopening the strait — a critical artery through which roughly 20% of global oil flows — would be the most effective step to stabilise markets.
Against this backdrop, oil prices climbed amid heightened volatility. Brent crude rose $1.57 to $113.76 a barrel, while U.S. West Texas Intermediate gained $3.09 to $101.32, with both benchmarks experiencing sharp intraday swings.
Analysts estimate that between 7 million and 10 million barrels per day of Middle Eastern supply could be at risk, underscoring the scale of potential disruption.
Escalation fears drive market volatility
Market sentiment remains fragile as geopolitical tensions intensify. Iran has warned it would strike energy infrastructure across the Gulf if the United States follows through on threats to target its electricity grid.
U.S. President Donald Trump has set a deadline for Tehran to reopen the Strait of Hormuz, warning that American forces could target Iranian power plants if compliance is not achieved within 48 hours.
The exchange of threats has reinforced expectations of further escalation, with analysts cautioning that assumptions Iran may back down are misplaced.
Iraq has already declared force majeure on oilfields operated by foreign companies, adding another layer of supply uncertainty.
Iranian officials reiterated that any attack on their energy sector would trigger retaliatory strikes against U.S. and allied infrastructure in the region.
Military spokesman Ebrahim Zolfaqari warned that energy, information technology, and water desalination facilities could be targeted, raising concerns over widespread disruption in a region heavily dependent on desalination for drinking water.
However, Iran’s Revolutionary Guards later appeared to narrow the scope of potential retaliation, denying intentions to strike desalination plants while maintaining that any attack on electricity infrastructure would be met in kind.
Israel-Iran strikes intensify tensions
Military activity has continued to escalate on the ground. Air raid sirens sounded across parts of Israel, including Tel Aviv, following incoming missile warnings from Iran.
In response, the Israeli military said it had launched a wide-scale wave of strikes targeting infrastructure in Tehran.
The prospect of tit-for-tat attacks on civilian infrastructure has further unsettled energy markets, contributing to choppy early trading in Asia.
War pressure extends to critical material
Beyond immediate oil supply concerns, the conflict is placing strain on strategic materials essential to modern warfare.
The U.S. and Israel have expended thousands of munitions in operations against Iran, many of which rely on tungsten — a critical metal used to penetrate hardened targets.
Unlike industrial applications where tungsten can be recycled, its use in munitions results in permanent loss, compounding supply pressures.
With the Iran conflict adding to ongoing demand from the war in Ukraine, global tungsten markets — already tightened by China’s export controls introduced in February 2025 — are now facing acute stress.
 warned the unfolding Middle East crisis is “very severe,” with disruption risks exceeding those seen during the oil shocks of the 1970s. IEA Executive Director Fatih Birol said the agency is consulting with Asian and European governments on whether to release additional…){kind=link}