Oil surges past $119 as Middle East war threatens global supplies

Stephen Grootes speaks to Feroz Basa, Head of Global Emerging Markets at Sanlam Investments, about the sharp surge in global oil prices as the expanding Middle East conflict disrupts supply and shipping routes. 

Listen to the interview in the audio player below.

Global oil prices surged sharply on Monday, reaching their highest levels in almost four years as escalating conflict in the Middle East threatens the flow of energy supplies around the world.

Brent crude briefly spiked above $119 a barrel, its highest level since 2022 as production cuts, damaged infrastructure and the effective closure of the Strait of Hormuz tightened global energy markets.

Although prices later pulled back slightly, the price of oil remains sharply higher than it was just a week ago, reflecting growing concern that the conflict could disrupt global energy supplies.

One of the biggest worries for energy markets is the situation around the Strait of Hormuz, a narrow waterway between the Persian Gulf and the Gulf of Oman.

About 20% of the world’s oil and liquefied natural gas normally passes through this route every day, but shipping activity has slowed dramatically as the conflict involving the United States, Israel, and Iran intensifies.

When traders fear that supply routes could be blocked or damaged, oil prices tend to jump quickly because buyers worry there may not be enough oil reaching global markets.

Speaking to Stephen Grootes on The Money Show, Feroz Basa, Head of Global Emerging Markets at Sanlam Investments says at this stage there's no end in sight.

"We don't really know what the end goal is, so we're not sure how it ends. And I think the market is spooked about that. So oil prices are a clear signal."

- Feroz Basa, Head of Global Emerging Markets - Sanlam Investments

"With Brent at $102, I would liken to say gold probably rises in the next six months if we don't see some really drastic changes in this war. But having said that, I don't think we can go on for even three months, if this war is not over in the next month or so, oil could spike to over $150 a barrel."

- Feroz Basa, Head of Global Emerging Markets - Sanlam Investments

"In South Africa, diesel goes up R10, maybe R12 a litre. Petrol goes up R6 a litre. The knock on effects on inflation, and it just spirals."

- Feroz Basa, Head of Global Emerging Markets - Sanlam Investments

Scroll to the top of the article to listen to the full interview.