Oil surged after Israel carried out a wave of military strikes against targets in Iran, raising fears of fresh confrontations across a region that accounts for a third of global crude production.
Brent spiked nearly 13%, topping $77 a barrel, while West Texas Intermediate also soared. Israeli Prime Minister Benjamin Netanyahu said the attacks targeted Tehran’s nuclear program and military capabilities, and would last until the threat was removed. Iran’s state television reported that Hossein Salami, commander of the Islamic Revolutionary Guard Corps, had been killed.
“The risk appetite of oil investors will likely be tested today, with immense volatility and uncertainty,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova Pte in Singapore. The worsening conflict raises the risk of disruptions to oil supplies, as well as contagion, she said.
Gold spiked as investors sought havens, with the precious metal surging above $3,435 an ounce.
Oil is on course for the biggest weekly gain since 2022 amid the spike in tensions, erasing year-to-date losses driven by the fall-out from global trade tensions and a decision by OPEC+ to revive shuttered capacity at a faster-than-expected clip. This week, JPMorgan Chase & Co. warned that prices could reach $130 a barrel in a worst-case scenario in the Middle East.
In a reflection of concerns about tighter near-term supplies, Brent’s prompt timespread — the difference between its two nearest contracts — pushed deeper into backwardation. The gap was $3 a barrel, up from 92 cents on Thursday. Another metric, the spread between this December’s contract and the same month in 2026, jumped above $2.90, up from 50 cents.
Ahead of the Israeli strikes, the US and Iran had been scheduled to hold a sixth round of nuclear talks in Oman on Sunday, although the status of the negotiations is now unclear. In recent days, US President Donald Trump said he was less confident that the US would reach a deal with Tehran to curb its nuclear ambitions in exchange for sanctions relief.
The US was not involved in the strikes, Secretary of State Marco Rubio said. Earlier this week, the US ordered some staff to leave its embassy in Baghdad after Tehran threatened to strike American assets in the region if it was attacked. In addition, the State Department said US government employees and family members in Israel were restricted from traveling outside cities.
A sustained gain in energy costs may fan global inflation, complicating the tasks facing central bankers as the navigate the fallout from the US-led trade war.
While the market’s over-riding concern will be that crude supplies could be interrupted as hostilities escalate, OPEC+ members, including de facto group leader Saudi Arabia, still have abundant spare capacity that could be activated.
“OPEC+ spare capacity has the potential to deal with loss in Iran production,” said Mukesh Sahdev, head of commodities markets — oil at Rystad Energy A/S. Still, potential retaliation by Tehran, including a possible blockage of the Strait of Hormuz, could make the usage of spare capacity challenging, he added.
The Strait of Hormuz is a narrow waterway at the mouth of the Persian Gulf that handles about a quarter of the world’s oil trade. Over the years, Iran has repeatedly targeted merchant ships traversing the choke point, and has even threatened to block the strait in the past.
“We are back in an environment of heightened geopolitical uncertainty, leaving the oil market on tenterhooks and requiring it to start pricing in a larger risk premium for any potential supply disruptions,” said Warren Patterson, head of commodities strategy at ING Groep NV.
. Read more on Markets by NDTV Profit.Oil is on course for the biggest weekly gain since 2022 amid the spike in tensions, erasing year-to-date losses. Read MoreMarkets, Business, World, Notifications
NDTV Profit
