Oil Spikes as Israel’s Attacks on Iran Stoke Fears of Wider War
Oil surged the most in more than three years after Israel carried out airstrikes against Iran, raising fears of a wider war in a region that accounts for a third of global crude production.
West Texas Intermediate crude futures advanced more than 7% to settle near $73 a barrel, the biggest one-day jump since March 2022. The price of European natural gas — also a major Middle Eastern export — rallied, and haven demand pushed gold closer to a record.
US President Donald Trump urged Tehran to make a deal “before it is too late,” in a post on Truth Social. The next attacks already being planned will be “even more brutal,” he said.
The attack marks the most dramatic escalation yet in a conflict that has loomed in the background of the oil market for about 20 months, but had yet to result in a significant loss of barrels. A broader regional clash in the Middle East threatens a major rerouting of global oil flows by restricting supplies through the Strait of Hormuz in addition to the possible reduction of Iranian exports, with JPMorgan Chase & Co. pegging the potential impact at more than 2.1 million barrels a day.
Israel launched another round of attacks on several locations in Iran, including the Natanz nuclear site and Tabriz. Israeli Prime Minister Benjamin Netanyahu earlier said strikes targeted Iran’s nuclear and ballistic missile programs and that the operation would continue until the threat was removed.
Hours after the first Israeli strikes, Tehran launched more than 100 drones, Israel Defence Forces said. Israel expects Iran to respond with missiles and further drone attacks, according to a military official.
The Qatari Ministry of Foreign Affairs said in a post on X that it will work with regional and international partners to urgently stop the aggression on Iran, taking some air out of the earlier rally. Elsewhere, Iran’s Supreme Leader Ayatollah Ali Khamenei vowed to “act forcefully” to avenge the Israeli military strike.
Oil’s rapid ascent erased year-to-date losses that had been driven by global trade tensions and an accelerated revival in OPEC+ output. Still, the market reaction didn’t suggest traders were anticipating a worst-case scenario.
In the physical market, prices of WTI rose to the highest since Tuesday as refineries take barrels as insurance against volatility, according to traders. WTI was quoted at a premium of 65 cents a barrel to Nymex oil prices in the Houston area Friday morning, up from 58 cents Thursday.
Israel’s overnight airstrikes on Iran also drove up shipping rates, with forward freight agreements for July — bets on the future cost of moving Middle East crude to Asia — jumping 15% to $12.83 a metric ton, according to data from brokerage Marex Group Plc.
West Texas Intermediate for July delivery surged 7.3% to settle at $72.98 a barrel in New York.
Brent for August rallied 7% to settle at $74.23 a barrel.
Source : Bloomberg
