Global oil markets have been thrown into a state of intense volatility, sending analysts scrambling to revise their price outlooks, following a dramatic escalation in tensions between Israel and Iran.
Reports of Israeli military strikes on Iranian nuclear and military sites have ignited fears of a broader regional conflict, pushing crude oil benchmarks to their highest levels in months and introducing a significant new layer of geopolitical risk to an already tight market.
In the immediate aftermath of the attacks, both Brent crude and West Texas Intermediate (WTI) futures witnessed sharp spikes, with prices surging by more than 7-9 percent in single-day trading. Brent crude, the international benchmark, briefly touched above $78 per barrel, while WTI climbed past $77.
These rapid gains represent the largest single-day movements for both contracts since 2022, when Russia’s invasion of Ukraine sent energy markets into disarray.
The sudden uptick underscores the market’s acute sensitivity to Middle East instability, given the region’s pivotal role in global oil supply.
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The rush to revise oil outlooks stems directly from the heightened uncertainty and the potential for severe supply disruptions.
Analysts are particularly focused on the Strait of Hormuz, a critical maritime chokepoint through which roughly one-fifth of the world’s total oil consumption, or about 18-19 million barrels per day, passes.
Any interference with shipping through this narrow waterway could significantly curtail global oil flows and trigger an unprecedented price surge.
Oil could spike toward $80 if Middle East tensions escalate and supply risks materialize, but rising OPEC+ output may cap gains and revive oversupply concerns into autumn,” Saxo Markets chief investment strategist Charu Chanana said, as quoted by Bloomberg.
“A worst-case scenario such as a closure of the Strait of Hormuz or a disruption to Iran’s 2.1 million barrels per day in exports could have serious implications for global oil supply and inflation expectations,” Chanana added.
Iran has vowed “a harsh response” to the Israeli attacks. Per the latest news updates from Reuters, citing Israeli military sources, Iran launched more than 100 drones at Israel, after Israel targeted uranium enrichment facilities, ballistic missile factories and senior army commanders.
The Iranian Revolutionary Guards corps has reported that its headquarters was hit by an Israeli missile and its top commander Hossein Salami was killed.
“Iran’s potential retaliation and blockage of the Straits of Hormuz can” threaten crude oil supplies, Rystad Energy’s head of commodity markets for oil, Mukesh Sahdev said. However, “given the stated US goal of negotiation, it is unlikely that the conflict will escalate into a full-blown war.”
