US oil futures surged as much as 9.5% on Monday as the conflict between Israel, the US, and Iran intensified, disrupting energy assets across the Persian Gulf. Iraq cut output at the giant Rumaila oil field, with officials warning that up to 3 million barrels per day could be shut in if the crisis continues. Storage constraints at key fields have tightened due to Strait of Hormuz disruptions, creating tangible supply losses.

The escalating conflict has exposed vulnerabilities in global energy infrastructure, with the Strait of Hormuz serving as a critical chokepoint for oil shipments. Bloomberg's Vincent Piazza noted that export bottlenecks are translating directly into supply shortages, pushing prices higher. The situation highlights how quickly regional conflicts can impact global markets, particularly when they affect major production hubs in the Middle East.

Energy traders are now pricing in significant risk premiums as the conflict shows no signs of abating. The combination of production cuts and shipping disruptions has created a perfect storm for oil markets, with prices reacting sharply to each escalation. The crisis underscores the fragility of global oil supply chains when key producers face military threats.