Brent crude rose as high as $81.40 a barrel early on Monday morning, before oil prices for the global benchmark fell back to below and around $77 later on.
Oil prices briefly climbed to five-month highs at the start of the week, before later easing back on Monday morning. Markets reacted quickly to events, after an immediate Iranian response to US strikes on its major nuclear sites failed to materialise.
The absence of a strong, direct Iranian military response meant that crude supplies from the Middle East remain largely unaffected by the escalating conflict. This was reflected in the oil price movements that played out throughout the morning.
Brent crude, the global benchmark, briefly climbed to $81.40 a barrel during early Asian trading before settling near $77 in London. Meanwhile, West Texas Intermediate, the US benchmark, jumped around 4.6% before retreating to trade just slightly higher at $74.13. Both contracts had climbed around 10% since Israel’s unexpected assault on Iranian targets 10 days earlier.
Some market analysts noted that while geopolitical risk premiums have returned, actual supply from the region has held steady. As it stands, traders are patiently awaiting Iran’s potential response. The main question now is what Tehran might do next, and whether the conflict spreads to energy sites or affects major shipping routes.
Oil prices depend on the Strait of Hormuz
Military leaders from Iran have vowed to retaliate, heightening concerns over potential attacks on shipping or crude facilities. Much of the focus is on the Strait of Hormuz, a key route for around 20% of the world’s oil supply. Any attempt to block or disrupt this narrow passage between Iran and the Gulf states could lead to a sharp rise in oil prices.
Indeed, several large tankers have already diverted course or anchored outside the strait amid growing fears of confrontation. However, despite its ongoing threats, Iran is widely believed to lack the capability required to fully close the waterway. That said, targeted attacks on individual vessels or ports remain a real possibility.
Beyond maritime threats, Iran could strike oil infrastructure in neighbouring states such as Saudi Arabia, Qatar, or the UAE. Regional powers have called for de-escalation, warning that further conflict could destabilise energy markets and broader economic stability. Qatar’s foreign ministry labelled the situation as “dangerous” with the potential for “catastrophic repercussions”.
Despite the current volatility, oil markets remain well supplied due to available spare capacity within OPEC+ and strong global inventories. However, should tensions lead to sustained disruption, particularly in shipping or production hubs, prices could experience a significant spike.
Some forecasts suggest oil could surge to between $120 and $150 per barrel if shipping faces blockades or damage hits production facilities. Such a price spike could add pressure to inflation and pose risks to global economic growth.
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