Brent crude rose over $5 to $94.21 a barrel on Monday. Renewed strikes between Israel and Iran triggered the price spike, casting doubt on a potential ceasefire. This escalation reintroduces a significant geopolitical risk premium to the global market.
Fears of a wider conflict have raised concerns over supply disruptions, particularly regarding the Strait of Hormuz. The price increase provides a strong tailwind for the energy sector, which is expected to outperform the broader market.
The conflict reinforces an ongoing tight balance between global supply and demand. Rising prices directly benefit the earnings prospects of major oil and gas producers held within energy ETFs like XLE and VDE.