'$120 oil isn’t out of question': US strike on Iran just made Monday a market minefield

U.S. airstrikes on three major Iranian nuclear sites have ignited global fears of wider conflict.

President Donald Trump framed the strikes as a pressure tactic to bring Tehran back to the negotiating table, insisting that no further attacks are planned “for now.” But the Middle East remains on edge. U.S. forces and regional allies are on high alert for potential Iranian retaliation against American or allied targets.

Brent crude futures spiked nearly 18% during the week, briefly touching $79 per barrel before retreating. By week’s end, oil settled around $77, with West Texas Intermediate hovering near $75. 

Shipping insurers flagged the Strait of Hormuz as a high-risk zone, doubling tanker rates and forcing some vessels to reroute.

“The risk premium on oil is back with a vengeance,” said an energy strategist at Saxo Markets. “If Strait is compromised, $120 oil isn’t out of the question.”

Multiple major banks and analysts (including JP Morgan, Citi, and Deutsche Bank) have modeled scenarios where a full closure or extended disruption of the Strait could push crude oil prices to $120–$130 per barrel, or even higher if the disruption is prolonged

The S&P 500 and Nasdaq closed lower on Friday amid fears of a widening war and inflation spikes driven by rising energy costs. Traders rushed to safe havens, driving up the U.S. dollar and gold prices. Market volatility surged as investors closed out positions ahead of the weekend.

As markets prepare to reopen Monday, analysts warn of sharp price gaps if Iran retaliates or new attacks occur. “Equities are on a knife’s edge,” said a portfolio manager. 

Beyond markets, the conflict poses serious policy dilemmas. Higher oil prices may derail central banks' plans to cut interest rates. Global inflation could reheat just as many economies attempt to cool.

Though Trump has left the door open to diplomacy, the coming days will test whether this is a pivot point—or the start of a deeper conflagration.