Oil prices surge above $112 as Gulf attacks rattle markets

Thursday 19 March 2026 - 14:40

By: Dakir Madiha

Oil prices surge above $112 as Gulf attacks rattle markets

Asian stock markets fell sharply on Thursday as escalating attacks on energy infrastructure in the Gulf pushed oil prices higher, while the US Federal Reserve and the Bank of Japan held interest rates steady amid rising economic uncertainty.

Oil prices jumped after strikes targeting key facilities across the region. Brent crude rose above $112 per barrel early in the session following exchanges between Israel and Iran. Tehran accused Israel of attacking the South Pars gas field and responded with missile launches toward Qatar and Saudi Arabia, warning that energy sites across the Gulf were now potential targets. Qatar’s national energy company reported significant damage at Ras Laffan Industrial City, a major global hub for liquefied natural gas processing.

The disruption of the Strait of Hormuz has been a major driver of the price surge. The waterway carries roughly one fifth of global oil supply, but commercial shipping traffic has dropped from about 138 daily transits before the conflict to near zero. The International Energy Agency described the situation as the largest oil supply disruption on record, estimating that global supply could fall by 8 million barrels per day in March.

Central banks opted for caution as geopolitical risks intensified. The Federal Reserve kept its benchmark interest rate in a range of 3.5 percent to 3.75 percent, marking its second pause of 2026. Chair Jerome Powell said the central bank faces a difficult balance between persistent inflation pressures, now worsened by geopolitical tensions and trade policies, and signs of a weakening labor market. While projections still indicate a possible rate cut later this year, Powell warned that progress on inflation remains uncertain.

The Bank of Japan also held its short-term rate at 0.75 percent, the highest level since 1995. Expectations for a near-term rate increase have faded as economic risks tied to the conflict grow. Economists surveyed expect the next move toward 1 percent to be delayed until at least late June.

Financial markets reacted negatively. Japan’s Nikkei 225 dropped 2.4 percent ahead of the BOJ decision, while a broader Asian equity index fell more than 1.3 percent. China’s Shanghai Composite declined 1.37 percent. The downturn followed losses on Wall Street, where both the S&P 500 and Nasdaq 100 fell by 1.4 percent in the previous session.

Within the Federal Reserve, Governor Stephen Miran cast the only dissenting vote, supporting a quarter-point rate cut. His position aligns with calls from former president Donald Trump for immediate monetary easing. Powell, nearing the end of his term, said he will remain in his role until a successor is confirmed.