Oil rises above $115 and Asia shares slide as Iran war enters fifth week

Global oil prices jumped and stocks fell sharply on Monday morning in Asia after the US-Israel war entered its fifth week.

The price of Brent crude rose by more than 3% to above $115 (£86.77) a barrel, while US-traded oil climbed to $103 after gaining around 3.5%. It puts Brent on track for its biggest monthly gain on record.

Stock markets in Asia opened lower, with Japan's Nikkei 225 down by 4.5% and the Kospi in South Korea 4% lower.

It comes after Iran-backed Houthi rebels in Yemen joined the conflict by striking Israel over the weekend and Iran threatened to expand retaliatory strikes against universities and the homes of US and Israeli officials.

US President Donald Trump said in an interview with the Financial Times on Sunday that he could "take the oil in Iran" and possibly seize its major fuel hub of Kharg Island.

When asked about Iranian defence on the island he said: "I don't think they have any defence. We could take it very easily."

Trump compared the potential move to Venezuela where the US plans to control the oil industry "indefinitely" after the seizure in January of then-President Nicolás Maduro.

Also over the weekend, Iran's parliament speaker warned that his country's forces were "waiting for American soldiers" as a further 3,500 US troops arrived in the Middle East.

Global energy markets have been hugely volatile after Tehran retaliated to US and Israeli strikes by threatening to attack ships that try to cross the Strait of Hormuz.

Around 20% of the world's oil and gas supply usually passes through the narrow waterway but have largely come to a standstill, pushing up prices.

Energy markets expert Sean Foley from Macquarie University said he expected oil prices to rise further unless the conflict eases.

The Houthi strikes have raised concerns that the armed group could stop energy shipments passing through Bab al-Mandeb strait near Yemen, Foley said.

A blockade of the waterway could hit a further 10% of world's oil supply, "putting significant strain on global supply chains", Foley said.

Andrew Lipow from consulting firm Lipow Oil Associates said he expected the price of Brent to reach $130 a barrel in the coming weeks as threats against the global energy supply continue.

"My greatest fear is that you have a general economic slowdown around the world... because consumers simply run out of money as they're spending more on energy and, in addition, food," he said.

The price of Brent was at around $72 a barrel on 27 February, the day before the US and Israel struck Iran.

On 18 March, the benchmark oil contract hit $119.50, the highest level since June 2022.