Oil Prices Edge Higher Amid Rising Tensions After U.S. Strikes on Iran
Oil futures saw modest gains in early trading Monday following the United States’ surprise military strikes on Iranian nuclear facilities, raising fresh concerns over potential disruptions in Middle East oil supplies.
U.S. West Texas Intermediate (WTI) crude was up 7 cents, or 0.1%, trading at $73.92 per barrel, while global benchmark Brent crude gained 8 cents, or 0.1%, reaching $77.09 per barrel. Both contracts, however, had retreated significantly from their overnight highs, which saw Brent surge more than 5% past $81 and WTI climb to its highest level since January.
The market’s latest spike was triggered by President Donald Trump’s unexpected announcement over the weekend that the U.S. had directly targeted Iranian nuclear sites in Fordo, Natanz, and Isfahan. This marked a significant escalation in the ongoing conflict involving Iran and Israel, drawing global attention to potential retaliatory actions by Tehran.
Iran’s Foreign Minister warned on Sunday that the Islamic Republic reserves “all options” to protect its sovereignty, fueling speculation about possible countermeasures that could further destabilize global oil markets. Analysts at S&P Global Platts noted that while prices have spiked, the rally could be short-lived if Iran opts against immediate retaliation.
Strait of Hormuz in Focus
Energy analysts warn that the worst-case scenario would involve Iran attempting to close the Strait of Hormuz — a vital chokepoint through which approximately 20 million barrels of crude oil, accounting for 20% of global consumption, flowed daily in 2024, according to the U.S. Energy Information Administration.
Iranian state media reported that the nation’s parliament supports shutting the strait, although any final decision rests with Iran’s national security council. In response, U.S. Secretary of State Marco Rubio cautioned that such a move would amount to “economic suicide” for Iran, given its heavy reliance on the strait for its own oil exports.
“We retain options to deal with that,” Rubio said during a Fox News interview. “It would hurt other countries’ economies a lot worse than ours. It would be a massive escalation that would prompt a broad international response.”
Iran produced 3.3 million barrels per day in May, according to OPEC’s latest oil market report, exporting roughly 1.84 million barrels daily — most of which was shipped to China. Rubio urged Beijing to leverage its influence, emphasizing that about half of China’s seaborne crude imports come from the Persian Gulf.
Regional Instability Heightens
Beyond Iran, regional tensions are also flaring in Iraq, OPEC’s second-largest oil producer, where pro-Iranian militias have issued veiled threats against the U.S. in the event of further hostilities targeting Iran’s leadership.
Meanwhile, Iran’s Revolutionary Guard issued a stark warning Sunday, declaring that U.S. military bases in the region represent strategic vulnerabilities rather than strengths, though no specific targets were named.
Amid the rising tensions, the fragile but recently revived diplomatic ties between Iran and Saudi Arabia may serve as a potential buffer against broader supply disruptions. The Saudi Foreign Ministry expressed “deep concern” over the escalating conflict but has so far refrained from deeper involvement.
In a reminder of the region’s volatility, Saudi oil facilities at Abqaiq and Khurais suffered major damage in 2019 during attacks linked to the Iran-backed Houthis — strikes for which Riyadh and Washington blamed Iran, though Tehran denied involvement.
As the situation evolves, International Energy Agency chief Fatih Birol assured markets that while supplies remain stable for now, global authorities are prepared to act if necessary, with 1.2 billion barrels of emergency reserves ready to be deployed.
