Oil prices jumped suddenly, and markets around the world reacted fast as investors started worrying about what happens if prices stay this high.
Hedge fund manager Spencer Hakimian addressed the issue on social media:
“I don’t think people are realizing that NOTHING in the global economy works at $120/Oil. Nothing.”
Hakimian also posted a longer prediction about how he believes the situation could unfold politically.
“Let me predict the future for you,” he wrote, suggesting oil would stay above $100 for several days before the United States eventually leaves Iran.
“Oil Stays >$100 for a few more days,” he wrote in the post, which also criticized President Donald Trump’s handling of the conflict and speculated about how the administration might declare victory.
Oil Surge Sparks Market Anxiety
The warning comes as oil prices spiked during the escalating conflict between the United States and Iran.
Brent crude briefly surged near $120 per barrel, marking one of the biggest jumps in years and rattling financial markets around the world.
According to Reuters, the global benchmark touched about $119.50 before easing somewhat.
Even after pulling back, oil remained sharply higher, with Brent still up around 16% at roughly $107.80 a barrel.
The sudden price spike triggered a wave of risk-off behavior across financial markets. Investors rushed into assets considered safer during periods of geopolitical instability, particularly the U.S. dollar.
At the same time, currencies viewed as more vulnerable to rising energy costs took a hit.
The British pound dropped 0.81% to $1.331, putting it on track for its largest daily fall in more than a month.
British government bonds also declined for a third straight day, while the country’s stock market slid as investors tried to gauge what sustained high oil prices might mean for economic growth.
Inflation Fears Grow
Much of the concern centers on inflation.
Energy costs affect nearly every part of the modern economy, from transportation and manufacturing to food production and shipping.
When oil rises sharply, those higher costs can quickly spread through supply chains and consumer prices.
Susannah Streeter, chief investment strategist at Wealth Club, told Reuters the market reaction reflects growing fears about what sustained triple-digit oil might mean.
“It’s been the biggest jump since the outbreak of the pandemic, and investors are bracing for an inflation crisis,” Streeter said.
Higher inflation could put central banks in a difficult position. Many had previously been expected to ease monetary policy this year as economic growth cooled.
But rising energy prices can force policymakers to consider tighter policy to keep inflation under control.
In Britain, traders quickly adjusted their expectations. Markets began pricing in more than a 50% chance that the Bank of England will raise interest rates this year.
Just weeks earlier, investors had been betting on multiple rate cuts.
Why $120 Oil Matters
Hakimian’s warning reflects a broader concern among market observers: the global economy has become highly sensitive to energy costs.
Much of the global economy runs on fuel. Planes, cargo ships, trucks and factories all depend on oil in some way.
When prices jump quickly, companies across those industries suddenly face higher costs.
Countries that import most of their energy tend to feel the pressure first.
The United Kingdom and much of Europe rely heavily on imported oil and gas, which helps explain why the pound and the euro weakened as prices surged.
The United States is in a different position. It produces large amounts of oil and natural gas, which can soften some of the economic pressure when global prices rise.
Hakimian suggested many people may be underestimating how disruptive $120 oil could be.
Governments May Intervene
If oil remains elevated, governments may step in to soften the economic blow.
The Financial Times reported that finance ministers from the G7 are discussing a possible coordinated release of oil from strategic reserves.
Such moves are sometimes used to calm markets and increase short-term supply during crises.
Officials in the United Kingdom are also weighing the potential cost of supporting households facing rising energy bills.
UK Prime Minister Sir Keir Starmer signaled that helping people manage the cost of living would be a priority as the situation develops.
Sam Hill, head of market insights at Lloyds Bank, said government action could become a major theme in the days ahead.
“A market theme for this week is set to be consideration of the implications of potential fiscal interventions to manage the impact of higher energy prices,” Hill said.
Previous energy shocks have already shown how expensive those interventions can become.
Support programs introduced during the 2022–2023 energy crisis following Russia’s invasion of Ukraine cost the British government roughly 52 billion pounds ($69 billion), according to Lloyds Bank estimates.
Markets Brace For Volatility
For now, investors appear to be preparing for more turbulence.
The FTSE 100 fell about 1.5% in early trading, although it performed slightly better than broader European markets because the index includes several large energy companies that benefit from higher oil prices.
Still, many analysts say the bigger picture remains uncertain. If geopolitical tensions continue pushing oil prices higher, the economic pressure could intensify.
That possibility is why warnings like Hakimian’s are gaining attention across financial markets.
The hedge fund manager’s message was simple and stark: at $120 oil, the entire system begins to strain.