Oil Prices Surge As Israel Strikes Iran: Geopolitical Tensions Fuel Supply Fears

Israel launched attacks targeting Iran’s military assets, including nuclear infra and missile facilities—an action that significantly heightened concerns over global oil supply security.

Analysts pointed out that up to 20 million barrels per day of supply could be at risk in a worst-case scenario involving targeted strikes or restricted access through the Strait of Hormuz.

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Crude oil prices saw their sharpest single-day gains in over two years on Friday, spurred by mounting geopolitical tensions in the Middle East following Israeli airstrikes on Iran.

The market responded with alarm to news that Israel had launched attacks targeting Iran’s military assets, including nuclear infrastructure and missile facilities—an action that has significantly heightened concerns over global oil supply security.

By 8:45 AM on Friday, Brent crude  soared $6.29, marking a 9.07 per cent jump to $75.65 per barrel, after peaking at $78.50—the highest since January 27. Meanwhile, US West Texas Intermediate (WTI) crude saw a comparable leap, rising $6.43 or 9.45 per cent to reach $74.47 per barrel, following an intraday high of $77.62. These dramatic price movements mirrored the volatility seen in 2022 during Russia’s invasion of Ukraine, underscoring the sensitivity of oil markets to geopolitical flashpoints, reported Reuters.

Markets Remain In High Risk Mode

Industry experts warned that the market is now factoring in a heavier risk premium, anticipating potential disruptions to supply. “This has elevated geopolitical uncertainty significantly and requires the oil market to price in a larger risk premium for any potential supply disruptions,” noted Warren Patterson and his team of analysts at ING.

Energy analysts and traders across Asia remain cautious in assessing the full impact on oil flows, with attention focused on Iran's potential retaliation. A trader in Singapore remarked, “It's too early to tell but I think the market is worried about shutting off of the Strait of Hormuz,” a critical chokepoint for global oil shipments.

According to MST Marquee senior analyst Saul Kavonic, a meaningful disruption would require a further escalation. He pointed out that up to 20 million barrels per day of supply could be at risk in a worst-case scenario involving targeted strikes or restricted access through the Strait of Hormuz.

Iran Vows to Retaliate; Global Markets React Sharply

In response to the Israeli action, Iran's Supreme Leader Ayatollah Ali Khamenei warned of severe consequences, saying Israel would face “harsh punishment” for the assault, which reportedly killed several top military commanders. US Secretary of State Marco Rubio clarified that Washington had no role in the operation, labeling it a "unilateral action" by Israel and urging Tehran to refrain from attacking American personnel or interests.

The heightened tension also rattled global financial markets. Asian stocks slid in early trading, led by a drop in US futures. Simultaneously, investors turned to traditional safe-haven assets like gold and the Swiss franc amid growing fears of regional instability.

“Iran has announced an emergency and is preparing to retaliate, which raises the risk of not just disruptions but of contagion in other neighbouring oil producing nations too,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. She added that even without US involvement, the threat of a wider conflict is already influencing investor behavior.

As markets brace for potential aftershocks, all eyes remain on how Iran chooses to respond and whether the geopolitical friction will escalate into a prolonged regional crisis.