Oil prices surged around 25 per cent on Monday to their highest since mid-2022, with Brent on track ‌for a record one-day gain, while gold fell 2pc as an escalating Iran war squeezed world energy supplies, boosted the dollar and dampened hopes of interest-rate cuts.

Agriculture markets, led by edible oils, rose as they took their cue from oil prices due to the extensive use ​of vegetable oils in making biofuels. Aluminium firmed on supply worries even as other metals faced headwinds from ​a stronger dollar.

“The violent reaction stems from the markets seeing no obvious offramp in the escalating ⁠Middle East conflict, now a high-stakes standoff where neither side appears willing to blink first,” Tony Sycamore, IG market ​analyst, said in a note.

“The risk of more lasting economic damage continues to build by the day.”

Iran on Monday named Mojtaba Khamenei ​to succeed his father, Ali Khamenei as Supreme Leader.

Soaring oil lift vegoils, grains

Brent was on track for its biggest one-day gain ever in both percentage and ​absolute terms as the expanding US-Israeli war with Iran led some major Middle Eastern oil producers to cut supplies, and ​on fears of prolonged disruption to shipping through the Strait of Hormuz chokepoint.

Brent crude futures climbed to a high of $119.50 per barrel ‌, and US ⁠West Texas Intermediate (WTI) to $119.48 a barrel.

“…the situation appears to be deteriorating further,” ING analysts said in a note. “In addition, upstream oil production has started to shut in, with producers facing storage constraints. Iraq, Kuwait, and the UAE began reducing oil production.”

In agricultural markets, Malaysian palm oil rose 9pc, and Chicago soybean oil climbed to its highest since late 2022, buoyed by ​the crude oil rally. Wheat ​rose to its highest ⁠since June 2024, and corn prices hit a 10-month high.

Gold fell more than 2pc as a stronger dollar weighed on greenback-priced bullion, while higher energy costs fuelled inflation concerns and further ​dimmed the prospects for near‑term reductions in interest rates.

The dollar hovered near a three-month ​high hit last ⁠week, making bullion more expensive for holders of other currencies.

Oil-driven inflation fears and delayed rate-cut expectations likely strengthened US yields and the dollar, outweighing safe-haven demand and pushing gold down.

Aluminium jumps on supply disruptions

Aluminium soared to its highest in four years as ⁠supply concerns ​due to the Middle East war intensified.

Benchmark three-month aluminium on the London ​Metal Exchange hit its highest since March 2022 at $3,544 per ton.

Qatari smelter Qatalum and Aluminium Bahrain have already declared force majeure on shipments amid rising ​tensions in the Middle East.

Other base metals were weighed down by a firmer dollar.