Oil prices rise again as the Iran war enters its 5th week

• Oil prices rose about 3% to over $115 a barrel on Sunday.
• The US and Israel's war on Iran entered its 5th week.
• Gas prices in the US are now averaging almost $4 per gallon.

Oil prices rose on Sunday after the Iran-backed Houthis in Yemen launched cruise missiles and drones at Israel, marking their entry into the war.

Brent oil reached $116.75 a barrel late on Sunday, a $4 increase from its Friday high of $112.57. Western Texas Intermediate hit $103.38 a barrel.

Meanwhile, President Donald Trump told the Financial Times on Sunday that he wanted to "take the oil in Iran" and suggested that he could seize the export hub of Kharg Island.

"To be honest with you, my favourite thing is to take the oil in Iran, but some stupid people back in the US say: 'Why are you doing that?' But they're stupid people," Trump told the FT.

"Maybe we take Kharg Island, maybe we don't. We have a lot of options," Trump told the FT.

He added that that would mean that "we had to be there for a while."

Oil prices have surged since the US and Israel began bombing Iran at the end of February, and Iran retaliated by essentially closing the Strait of Hormuz. About 20% of the world's oil supply and liquified natural gas passes through the waterway off Iran's coast. Major oil hubs across the Middle East have also been damaged during the conflict, further straining the global supply chain.

Most recently, the Houthis launched two missile and drone attacks at Israel over the weekend. Yahya Saree, the spokesman for the Yemeni Armed Forces, confirmed the attacks on X.

For American consumers, this all translates to higher gas prices. The national average in the US was $3.98 on Sunday, up from $2.98 in February. The International Energy Agency has released 400 million barrels of oil from a strategic reserve to ease economic uncertainty.

Although US Energy Secretary Chris Wright said on March 8 the war wouldn't be "long-term," the Trump administration and Iranian officials have not yet signaled an exit plan.

On Saturday, The Washington Post reported that the Pentagon is preparing for weeks of ground operations in Iran.

The developments over the weekend weighed on the stock markets, with Asian markets kicking off the week's first trading in the red.

Japan's Nikkei 225 and South Korea's Kospi indexes both lost over 5%. Hong Kong's Hang Seng Index was down about 2%.

All three major US stock futures were down about 0.4% late on Sunday.

Markets are now focused on the escalating conflict rather than on diplomatic efforts, Chris Weston, the head of research at Pepperstone, wrote.

"The market is now reacting to higher crude pricing and towards the fallout in the economic consequences," Weston wrote, pointing to expectations of short-term inflation, interest rate volatility, and energy supply shortages.