Brent Crude Surges Past US$102 on Middle East Supply Risks

Brent crude oil prices surged past US$102 per barrel on Monday, driven by rising supply risks and escalating tensions in key Middle East shipping routes. Saudi-backed forces in Yemen launched a major military operation against the Iran-backed Houthis, who now control the Bab el-Mandeb strait, a critical chokepoint connecting the Red Sea and Gulf of Aden. The conflict has intensified concerns over oil transport disruptions, compounding existing supply issues from the broader Middle East conflict.

OPEC+ members decided over the weekend to maintain current production quotas, despite crude prices nearing US$100 per barrel and diesel prices hitting record highs. This decision leaves the market vulnerable to further supply disruptions without additional output support, while governments struggle with the economic impact of higher energy costs. The G7 nations have responded by releasing emergency oil reserves, highlighting worries about prolonged supply disruptions.

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. However, the ringgit has weakened 0.94 percent against the US dollar over the past month, though it remains 3.11 percent stronger than a year ago.

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