Israel and Iran continued to exchange missile fire on Monday, intensifying fears of a broader Middle East conflict, as U.S. President Donald Trump signals potential military action targeting Iran’s Gulf islands. The escalation has contributed to a sharp surge in global oil prices.
Iran launched new strikes on a water desalination plant in Kuwait after its own power facilities were attacked over the weekend, cutting electricity to parts of Tehran. Meanwhile, Saudi Arabia intercepted five ballistic missiles, underscoring the regional volatility.
The conflict has already disrupted global markets, with fuel shortages reported across Asia, stock markets in turmoil, and crude oil prices soaring. Brent crude traded near $117 per barrel, while the main U.S. benchmark surpassed $100 per barrel. Analysts warn that any U.S. ground operation or further Iranian retaliation could push prices to historic highs.
“If the U.S. were to launch a ground invasion of Iran, possibly taking Kharg Island, or if Tehran intensifies retaliatory strikes on energy infrastructure or fully closes the Strait of Hormuz, projections of $200-a-barrel oil are no longer implausible,” said Tamas Varga, analyst at PVM Energy.
Since the start of the war, global benchmark Brent crude has risen nearly 60 percent, while U.S. WTI crude has climbed more than 50 percent. Trump, in an interview with the Financial Times, stated he wants to “take the oil in Iran” and could seize the strategic export hub of Kharg Island, likening it to U.S. operations in Venezuela.
Despite the tensions, Trump expressed hope for a negotiated resolution, with Pakistan hosting regional foreign ministers from Saudi Arabia, Turkey, and Egypt to mediate peace talks. Officials said both Iran and the United States have expressed confidence in Pakistan’s role as a facilitator.
On the ground, hostilities persist. Israel confirmed airstrikes on Iran-backed Hezbollah positions in southern Lebanon, resulting in casualties among Lebanese soldiers and UN peacekeepers. Iran also reported that Israeli strikes killed Alireza Tangsiri, commander of the Revolutionary Guards naval forces, last week.
The war has heavily affected civilians. Residents in Tehran reported sleepless nights due to constant strikes, describing the city as “shaking” from the attacks. Iran’s closure of the Strait of Hormuz—a critical artery for a quarter of the world’s seaborne oil trade—has further heightened global energy security concerns.
Analysts warn that continued escalation could further disrupt oil supplies and trigger even more volatility in global markets, highlighting the high stakes of the ongoing Middle East conflict.