Brent crude has risen by more than 50% since the start of March, eclipsing its previous record monthly gain set during the Gulf War. Prices climbed from just over $72 per barrel at the end of February to above $112 by the final trading days of the month, at one point nearing $120—levels not seen since mid-2022.
The sharp rally has been largely attributed to disruptions in the Strait of Hormuz, a critical shipping route through which roughly a fifth of global oil and gas supplies typically pass. Iran’s near-closure of the strait has significantly constrained global supply, with analysts estimating that up to 9 million barrels per day have been removed from the market.
U.S. benchmark West Texas Intermediate has followed a similar trajectory, posting gains of nearly 50% over the same period—its strongest monthly rise since the early stages of the COVID-19 pandemic in 2020.
Efforts to stabilise the market, including a coordinated release of hundreds of millions of barrels from strategic reserves, have done little to curb the upward momentum in oil prices. Investors appear increasingly focused on the risk of prolonged supply disruptions rather than short-term policy interventions.
Meanwhile, political developments have added to market uncertainty. Statements from Donald Trump earlier in the month briefly eased price pressures, but confidence waned as the conflict dragged on. A proposed extension for Iran to reopen the Strait of Hormuz failed to reassure markets, with oil prices continuing to climb and equities falling.
The energy rally has stood in stark contrast to broader financial markets, where most major asset classes have struggled. Traditionally seen as a safe haven, gold has declined sharply, falling around 15% in March—its steepest monthly drop since the 2008 financial crisis. Analysts suggest some investors may have sold gold to cover losses elsewhere, while large-scale sales by central banks, including Turkey’s, have also weighed on prices.
Equity markets have also come under pressure. The Dow Jones Industrial Average slipped into correction territory, falling more than 10% from its recent peak as investors braced for continued instability in global energy supplies. In the UK, the FTSE 100 dropped more than 8% over the month, erasing earlier gains and reflecting broader concerns about economic growth.
Bond markets have not been spared. Yields on UK government debt surged as expectations for interest rate cuts by the Bank of England diminished, marking one of the sharpest increases in borrowing costs since the market turmoil following Liz Truss’s 2022 mini-budget.
Economists warn that the current energy shock could have more severe consequences than previous crises, as governments—particularly in Europe—have less fiscal flexibility to cushion the impact. With higher energy costs feeding into inflation and dampening demand, the outlook for global growth has become increasingly uncertain.
As the conflict continues to reshape supply dynamics and investor sentiment, oil’s dramatic ascent underscores the fragility of global markets in the face of geopolitical risk.