Oil Prices Top $100 Per Barrel: What Does It Mean For Markets?

After oil prices breached the $100 per barrel mark, global banking major HSBC noted that the persistent shock of oil prices surging beyond this point would be more disruptive to growth, which could hamper profits, and potentially undermine stock market multiples.

"Overnight crude oil soared by 20-30 per cent, to 110 US dollars per barrel, a level not seen since 2002. The reason was Israel attacked Iran's oil supplies, and that created a panic among investors," veteran market watch and investment manager Francis Lun told AP.

"For countries in East Asia, except for Malaysia and Indonesia, everybody else is a net importer of oil. And that will create inflationary pressure, and also of course, that will bring on economic damage, and certainly economic growth will slow and inflation will pick up. This is the worst-case scenario we saw when the US and Israel started to attack Iran, and everything is getting out of control now."

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Meanwhile, HSBC opined that with some parts of global markets, particularly in the US, now "priced for perfection", any adverse news could challenge performance.

"However, valuation gaps in emerging markets and developed market ex-US stocks, create some cushion against negative macro shocks," it said.

The price for a barrel of Brent crude, was trading at $114.78 a barrel and U.S. benchmark crude jumped to nearly $114.00 a barrel. Both were more than 20% above their closing prices Friday.

Crude prices have spiked to their highest levels in 14 years. They last rose above $100 shortly after Russia invaded Ukraine in 2022. Supply concerns have driven crude and gasoline higher as the war ensnares major oil-producing countries and hinders exports from the Persian Gulf.

Brent crude futures were up $24.96 or 27% at $117.65 per barrel at 0451 GMT - on track for the biggest-ever jump in a single day, while U.S. West Texas Intermediate (WTI) crude futures were up $25.72, or 28.3%, to $116.62.

WTI surged 31.4% to a session high of $119.48 a barrel earlier on Monday, while Brent rose as much as 29% to $119.50 a barrel. Before the surge on Monday, Brent had already climbed 27% and WTI by 35.6% last week.