Oil prices surged more than 9% on Friday, hitting their highest levels in nearly five months after Israel launched military strikes on Iran, intensifying Middle East geopolitical tensions and fuelling investor anxiety over potential disruptions in global crude oil supply.
Brent crude futures rallied by $6.29, or 6.07%, to $75.65 a barrel by 03:15 GMT after soaring to an intraday high of $78.50—its strongest level since January 27. U.S. West Texas Intermediate (WTI) crude also climbed $6.43, or 9.45%, to $74.47, having reached $77.62, the highest since January 21.
The spike marks the largest intraday gain for both benchmarks since early 2022, when Russia’s invasion of Ukraine jolted energy markets and sent oil prices skyrocketing.
Middle East Conflict Sparks Market Volatility
Israel confirmed that its military targeted Iranian nuclear sites, missile facilities, and senior commanders, warning that the operation aimed at halting Tehran’s atomic ambitions would be sustained. The escalation has added a significant geopolitical risk premium to the oil market.
“This has elevated geopolitical uncertainty significantly and requires the oil market to price in a larger risk premium for any potential supply disruptions,” analysts at ING led by Warren Patterson wrote in a note.
Traders in Singapore said the situation remains fluid, noting that the impact on oil shipments from the Middle East will hinge on how Iran retaliates and whether the United States becomes militarily involved.
Strait of Hormuz in Focus
The potential for supply chain disruption centres on the Strait of Hormuz, a vital oil chokepoint through which roughly 20% of the world’s oil passes.
“It’s too early to tell, but I think the market is worried about a potential shutdown of the Strait of Hormuz,” one Singapore-based oil trader said.
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Saul Kavonic, senior energy analyst at MST Marquee, said a worst-case scenario involving Iranian retaliation could place as much as 20 million barrels per day of oil supply at risk, either through direct attacks on regional infrastructure or strategic blockades of maritime oil routes.
Iran Vows Retaliation, Global Markets Rattle
Iran’s Supreme Leader Ayatollah Ali Khamenei vowed “harsh punishment” for Israel, claiming the strikes killed several Iranian commanders. While U.S. Secretary of State Marco Rubio said Washington was not involved in the attacks, he cautioned Tehran against targeting U.S. personnel or assets in the region.
“Iran has declared a state of emergency and is preparing for retaliation. This raises the risk of not just direct disruptions but also spillover into other oil-producing nations in the Gulf,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
The broader market response was swift. Asian equities tumbled in early trading, led by a steep drop in U.S. futures, while investors flocked to safe-haven assets including gold and the Swiss franc, reflecting growing investor anxiety.
Global Crude Market Faces New Supply Shock Risk
With oil prices rebounding sharply, analysts caution that further escalation could derail global energy market stability. The conflict’s trajectory, particularly Iran’s next moves and any possible U.S. involvement, will be closely watched.
“Although Trump has shown reluctance to participate, any direct U.S. military engagement could amplify concerns about energy security and fuel another price rally,” Sachdeva added.
As of Friday, the global oil market is pricing in a new chapter of geopolitical instability, with potential consequences for energy costs, global inflation, and monetary policy responses.
Global Financial Digest
