Global oil prices surged Monday, enriching energy corporations and speculators, as U.S. President Donald Trump's renewed threats against Iran intensified fears of escalating conflict. Brent crude, the international standard, gained 0.7% to $110.05 per barrel, while benchmark U.S. crude traded 1% higher at $106.49 per barrel. This rise marks a significant increase from roughly $70 a barrel in late February, when the Iran war began.
The surge in oil prices occurred as world shares mostly retreated. Tokyo’s Nikkei 225 fell 1% to 60,815.95, a decline led by technology-related stocks, after reaching all-time intraday highs last week. Hong Kong’s Hang Seng lost 1.1% to 25,675.18, and Australia’s S&P/ASX 200 declined 1.5% to 8,505.30. Shanghai Composite edged 0.1% lower to 4,131.53 following weaker-than-expected economic data from China for April. Taiwan’s Taiex dropped 0.7%, and India’s Sensex fell less than 0.1%. In Europe, France’s CAC 40 lost 0.9% to 7,883.42, and Germany’s DAX dropped 0.1% to 23,925.82. Britain’s FTSE 100 edged up 0.1% to 10,205.31.
War Fuels Capital Gains
The yield on the 10-year Japanese government bond surged to 2.8%, its highest level since the late 1990s, indicating a broader shift toward higher yields driven by the Bank of Japan's gradual interest rate increases and expectations of rising inflation due to higher energy costs. The yield was around 2.55% just one week ago. The yield on the U.S. 10-year Treasury also rose to 4.60%, up from 4.47% last Thursday and sharply higher than the nearly 4% level it held before the Iran war. On Friday, the benchmark S&P 500 dropped 1.2% from its record set the day before, the Dow Jones Industrial Average fell 1.1%, and the technology-heavy Nasdaq composite lost 1.5%. Seoul’s Kospi climbed 0.3% to 7,516.04 after trading lower earlier in the day, having crossed the 8,000 mark for the first time on Friday before declining partly on profit-taking by investors.
President Trump's social media post warned Iran that “the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them” following a call with Israeli Prime Minister Benjamin Netanyahu. This rhetoric, coupled with a drone strike Sunday on a United Arab Emirates’ nuclear power plant, fueled worries over a potential escalation in the conflict. The drone strike sparked a fire on the plant's perimeter, highlighting the risk of renewed war as the Iran ceasefire remains tenuous. ING commodities strategists Warren Patterson and Ewa Manthey noted in a research note that “Re-escalation risks are increasing.”
The State as Enforcer
The U.S. state has actively shaped the conditions for capital accumulation in the region. The Strait of Hormuz remains mostly closed, and the U.S. imposed its own sea blockade on Iranian ports last month. These actions directly impact global energy flows, including oil and gas, and serve to secure resources and markets for transnational corporations. U.S.-Iran negotiations over a permanent end to the war have stalled, demonstrating the limits of diplomatic efforts when underlying material interests are at stake.
Last week, a summit between Trump and Chinese President Xi Jinping in Beijing was widely watched for its potential to resolve the Iran war. While the White House stated both the U.S. and China agreed that the Strait of Hormuz "must remain open," a clear demand from global capital, tangible results on ending the conflict were absent. U.S. officials had hoped Beijing could use its economic ties with Iran to help broker a peace agreement and reopen the strait. Trump reported that Xi said China “would like to be of help” in negotiating an end to the war, but how Beijing might do so remains unclear. The ongoing closure of the strait and the U.S. blockade underscore the state's role in projecting power to protect accumulated wealth and maintain control over critical trade routes, even as it generates instability in global markets.