Oil prices surged on Monday as rising tensions in the Middle East rattled global markets. The spark? Coordinated U.S. and Israeli strikes on Iranian nuclear sites over the weekend. Brent crude futures jumped $1.92, or 2.49%, to $78.93 a barrel by early morning trading (0117 GMT), while U.S. benchmark WTI rose $1.89, or 2.56%, to $75.73. Earlier in the session, both hit five-month highs, Brent briefly touched $81.40 and WTI hit $78.40, before pulling back slightly as some investors locked in profits.
The dramatic price moves came as traders grew nervous about potential disruptions in oil supply from the region. Iran, a key OPEC producer, sits near the critical Strait of Hormuz, a chokepoint for nearly 20% of the world’s oil flow. As geopolitical uncertainty deepens, the market’s eyes are now firmly on whether tensions will cool, or escalate further. For now, oil is back in the spotlight, and energy traders aren’t looking away.
Iran’s Oil Production And Hormuz Risk Grip Markets
Iran ranks as the third-largest crude producer in OPEC, heightening the global impact of any conflict. The Iranian parliament approved a measure to close the Strait of Hormuz, which handles nearly 20% of global oil shipments. Market analysts highlighted that this move “multiplied” the risk of damage to oil infrastructure. Although pipelines offer alternatives, they cannot fully offset a closure of the strait. Many shipping operators have already started avoiding the region. Supply concerns are mounting as traders respond to evolving developments.
Market Reaction Remains Muted Despite Tensions
- As of 6:27 p.m. ET, Brent crude rose 3.17% to $79.45 per barrel.
- WTI crude climbed $3.18 to $76.19 per barrel.
- Analysts cited high OPEC+ spare capacity and strong global inventories for the subdued market response.
- Bearish macroeconomic conditions also contributed to the muted price movement.
- Previous incidents caused sharper spikes:
- In 2019, the Saudi Aramco Abqaiq attack caused a nearly 20% surge in Brent prices.
- In 2020, the U.S. drone strike on Qassem Soleimani led to a ~4% jump in WTI.
Goldman Sachs Warns Of Potential USD 110 Brent Spike
- Goldman Sachs warned Brent crude could “briefly peak at $110 per barrel” if Strait of Hormuz flows are halved for a month.
- The bank estimates Brent prices may remain 10% higher for 11 months following a major disruption.
- These projections emphasize volatility risks tied to potential supply interruptions.
- The current price surge reflects a geopolitical risk premium following the June 13 conflict escalation.
- Analysts believe this premium may fade unless disruptions to oil supply actually occur.
Profit-Taking May Cap Oil’s Upside
Some traders have already started unwinding long positions from the recent rally. Saxo Bank’s Ole Hansen noted that the “unwinding of some long positions” could limit further price gains. Brent crude prices have already surged roughly 13% since geopolitical concerns began in mid-June, while WTI has climbed about 10%. Analysts caution that any substantial rise beyond current levels would likely require actual disruptions to key oil flows or a shutdown at the Strait of Hormuz.
Traders Stay Alert Without Losing Their Cool
Over the weekend, U.S. airstrikes struck Iran’s Fordow, Natanz, and Isfahan nuclear sites, leaving visible damage and sparking fears of further escalation. Iran has vowed retaliation, and yes, that sounds serious. But rather than hitting the panic button, traders are calmly watching from the sidelines.
Oil markets have shown restraint, thanks to strong global supply backups, OPEC+ reserves, and healthy inventories. Still, all eyes are on Iran’s next move, especially around the Strait of Hormuz, because any disruption there could send oil prices soaring past the $100 mark.
Right now, traders are tracking OPEC+ policy calls, oil reserve data, and news on any shipping interruptions. It’s a time for vigilance, not hysteria- markets remain composed, ready to react if tension escalates. Until then, oil remains in focus, riding the uncertainty while maintaining balance.
