Oil prices surged over the weekend as tensions escalated between Israel and Iran, raising fears of a wider Middle East conflict. Brent crude rose over 2% amid reports of an Israeli strike on Iran’s South Pars gas field. Analysts caution price spikes may be temporary unless supply routes are threatened.
Global oil prices spiked on Monday in early Asian trading sessions as geopolitical tensions in the Middle East escalated sharply over the weekend. The renewed conflict between Israel and Iran has raised alarm over a potential regional war that could disrupt vital oil exports from the energy-rich region, threatening global supply chains and economic stability.
Brent crude futures rose by 2.3 percent to $75.93 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 2.2 percent, reaching $74.60 per barrel. These increases follow a significant 7 percent surge in oil prices recorded last Friday, underscoring how swiftly markets are reacting to developments in the region.
At one point, Brent crude climbed as high as 5.5 percent before retreating slightly to settle near the $75 mark, suggesting heightened volatility as investors weigh the potential fallout from the unfolding conflict.
According to media reports, Israel has launched a military strike targeting Iran’s South Pars gas field, a key asset in Tehran’s energy sector. This attack reportedly led to the shutdown of a major production platform. The aggressive move is being viewed as a potential flashpoint in the already fragile Middle East landscape.
The strategic implications are immense, particularly given the region’s central role in global oil supply. The Strait of Hormuz, located near Iran’s southern coast, is one of the world’s most critical oil chokepoints. Over 20 million barrels per day—about one-fifth of global oil consumption—pass through this narrow waterway. Iran has previously threatened to block the strait in response to external aggression, and any disruption here would severely affect international oil trade.
Emkay Global reported that Iran contributes approximately 3.3 million barrels per day (mbpd) to global oil production—around 3 percent of the global total—and exports about 1.5 mbpd. China is its largest importer, accounting for 80 percent of Iranian exports, followed by Turkey. A prolonged conflict could reduce this supply dramatically, sending shockwaves through international markets.
While the immediate market reaction has been strong, analysts remain cautious about a sustained surge in oil prices. Norbert Rucker, Head of Economics and Next Generation Research at Julius Baer, noted that oil prices typically spike in the early phases of geopolitical crises but often stabilize after the initial shock fades.
“Oil is the fever measure of such conflicts,” Rucker said. “The situation remains in flux, and the coming days and weeks will show how far the escalation goes. Our best guess is that this latest conflict follows the usual pattern, with prices rising temporarily before returning to previous levels. The oil market is very resilient today, and supplies are unlikely at serious risk unless the conflict significantly broadens.”
Rucker also explained that, historically, oil price spikes related to geopolitical tension average below 20 percent and tend to last up to three months, depending on the intensity of the conflict and the degree of disruption to oil infrastructure or shipping routes.
The situation is further complicated by the breakdown of nuclear talks between Iran and the United States. Tehran has warned that any direct attack would prompt retaliation against U.S. military bases in Iraq and neighboring countries. In response, Washington has already ordered the withdrawal of some personnel from the region, highlighting the seriousness with which the U.S. is treating the unfolding crisis.
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While the markets are reacting swiftly, the true test will come if the conflict spills over into other oil-producing countries such as Saudi Arabia, Iraq, Kuwait, or the UAE. Any disruption in exports from these nations could lead to a dramatic and prolonged surge in prices, impacting economies worldwide and potentially pushing inflation higher in oil-importing nations.
For now, investors and governments are keeping a close eye on developments, weighing the risk of a broader conflict against the resilience of today’s diversified oil supply chains.
