USOIL The current conflict between Iran and Israel has caused a sharp spike in oil prices due to fears of supply disruptions in a geopolitically sensitive region that is critical for global energy flows.
Key Effects on Oil Prices:
Price Surge:
Oil prices jumped over 7% on June 13, 2025, reaching multi-month highs. Brent crude rose to $76.190 close 73.535 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed to around $77.542 before closing at 72.91 per barrel on Friday
Earlier intraday spikes were even higher, with Brent briefly surging over 13% and WTI over 14%, marking the largest single-day gains since March 2022.
Risk Premium and Supply Concerns:
The Israeli strike on Iran significantly raised the "risk premium" on oil prices as markets worry about potential retaliation by Iran targeting oil infrastructure or blocking the Strait of Hormuz, a vital shipping route for about 20% of the world’s oil.
Iran produces about 3.3 million barrels per day (3% of global supply) and exports 1.5 million barrels daily, mainly to China and Turkey. Disruptions here could tighten global supply considerably.
Potential for Further Price Increases:
Analysts warn that if the conflict escalates, oil prices could surge beyond current levels, potentially topping $93 to $100 per barrel if Iran blocks the Strait of Hormuz or attacks Gulf energy installations.
Goldman Sachs projects Brent crude could peak slightly above $90 per barrel before falling back as supply stabilizes.
Broader Market Impact:
The conflict has also caused stock market declines and a flight to safe-haven assets like gold, which rose sharply alongside the oil price spike.
U.S. gasoline prices are expected to rise in the coming days due to higher crude costs, potentially increasing fuel prices significantly if the conflict worsens.
Summary
The Iran-Israel conflict has already caused a major jump in oil prices due to fears of supply disruptions in a key oil-producing region. The risk of Iran retaliating by targeting oil infrastructure or blocking the Strait of Hormuz could lead to sustained higher prices, with some analysts warning of a possible spike to $93–$100 per barrel if tensions escalate further. This situation is closely monitored by markets given its potential to impact global energy supplies and inflation worldwide
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