Brent crude jumps to US$102 on Middle East supply risks

Global oil supplies face growing risks as Brent crude prices surged past US$102 a barrel on Monday. The rise was driven by escalating tensions in the Middle East, particularly the Saudi-backed military operation against the Iran-backed Houthis in Yemen. The Houthis have taken control of the Bab el-Mandeb, a critical shipping route connecting the Red Sea and the Gulf of Aden, raising concerns about disruptions to oil transport.

Adding to the supply concerns, OPEC+ members decided over the weekend to maintain current production quotas for next month. This decision comes despite crude prices nearing the US$100 mark and record-high diesel prices at the pump. The lack of increased output will force the market to manage existing supply issues without additional support, while governments struggle with the economic impact of rising energy costs.

In response to the ongoing conflict, G7 nations have released emergency oil reserves to mitigate potential economic fallout from prolonged supply disruptions. Meanwhile, the US dollar remained strong, with the Dollar Index at 101.968 on Monday, up 0.04 percent from the previous session and 2.82 percent over the past month. Against the Malaysian ringgit, the US dollar traded at 4.0840, down marginally by 0.02 percent from the previous session but up 0.94 percent over the past month.

For Malaysia, sustained oil prices above US$100 could increase fuel and import costs, while a weaker ringgit against the US dollar could further drive up the cost of dollar-denominated energy imports. This combination could complicate efforts to control domestic cost pressures if the Middle East conflict continues to disrupt global energy supplies.