Oil prices surged above $115 per barrel on Monday as Asian financial markets fell sharply, reflecting growing investor anxiety over the widening conflict involving Iran, now entering its fifth week with no clear end in sight.
The escalation comes after Iran-backed Houthi rebels based in Yemen launched strikes against Israel over the weekend, marking a significant expansion of the regional conflict and raising fears that hostilities could spread further across the Middle East.
The involvement of the Houthis signals a broadening of the war beyond its original frontlines, drawing in proxy forces aligned with Tehran and increasing uncertainty about how many additional armed groups could be pulled into the fighting in the weeks ahead.
Energy markets responded swiftly to the developments, with crude oil prices climbing sharply as traders priced in the potential disruption to supply routes in one of the world's most strategically critical energy-producing regions. The Middle East accounts for a substantial share of global oil output, and any sustained conflict in the area typically sends commodity prices higher.
Asian stock markets mirrored the concern, with investors retreating from riskier assets amid the deteriorating security situation. Uncertainty of this magnitude tends to dampen economic confidence and weigh heavily on equities, particularly in export-driven economies that are sensitive to rising energy costs.
The Houthis, who control significant territory in Yemen, have long maintained close ties with Iran and have previously launched drone and missile attacks on neighbouring Saudi Arabia. Their decision to strike Israel represents a notable shift in targeting and suggests a coordinated effort by Iran-aligned forces to open multiple fronts simultaneously.
International observers and world leaders have warned that a broader regional war could have devastating consequences for global stability and the world economy, calling on all parties to exercise restraint and pursue diplomatic solutions before the situation deteriorates further.
