Oil soars as Trump's attack on Iran ramps up risks to supplies
Oil surged after the US struck Iran's three main nuclear sites and threatened further attacks, exacerbating a crisis in the Middle East and stoking concerns that energy supplies from the region could be disrupted. A map showing the Strait of Hormuz and Iran is seen behind a 3D printed oil pipeline in this illustration taken June 22, 2025.(Reuters)
Global benchmark Brent rallied as much as 5.7% to $81.40 a barrel, extending three weeks of gains. Timespreads widened. In a weekend address, US President Donald Trump said air attacks had 'obliterated' the trio of targets, and threatened more military action if Iran didn't make peace. In its initial reply, Tehran warned the strikes would trigger 'everlasting consequences.'
The US assault — which targeted sites at Fordow, Natanz, and Isfahan — dramatically raises the stakes in the confrontation and increases the premium that traders are pricing into the global energy market. Still, the extent of the gains will hinge on how Tehran opts to respond to the US moves.
The global oil market has been gripped by the crisis since Israel attacked Iran more than a week ago, with futures pushing higher, options volumes spiking along with freight rates, and the futures curve shifting to reflect tensions about tighter near-term supplies. The Middle East accounts for about a third of global crude output, and higher, sustained prices would boost inflationary pressures worldwide.
'This could set us on a path toward $100 oil, if Iran responds as they have previously threatened to,' said Saul Kavonic, an energy analyst at MST Marquee. 'This US attack could see a conflagration of the conflict.'
There are multiple, overlapping risks for physical crude flows. The biggest centers on the Strait of Hormuz, should Tehran seek to retaliate by attempting to close the chokepoint. About a fifth of the world's crude output passes through the narrow waterway at the entrance to the Persian Gulf.
Iran's parliament has called for the closure of the strait, according to state-run TV. Such a move, however, could not proceed though without the explicit approval of Supreme Leader Ayatollah Ali Khamenei. Rival Suppliers
In addition, Tehran could opt to target crude infrastructure in rival suppliers in the Middle East, such as fellow OPEC producers including Saudi Arabia, Iraq or the United Arab Emirates. After the US attack, both Riyadh and Baghdad expressed concern about the targeting of the nuclear facilities.
Elsewhere, Tehran could orchestrate attacks on ships on the other side of the Arabian peninsula in the Red Sea, encouraging Yemen-based Houthi rebels to harass vessels. After the US attacks, the group threatened retaliation.
If the hostilities escalate, Tehran's own oil-producing capabilities could be targeted, including the key export hub at Kharg Island. Such a move, however, could send crude prices soaring, an outcome that America might want to avoid. So far, Kharg Island has been spared, with satellite imagery pointing to a drive by Iran to expedite its exports of oil.
The crisis will also throw a spotlight onto the Organization of Petroleum Exporting Countries, and its allies including Russia. In recent months, OPEC has been relaxing supply curbs at a rapid clip seeking to regain market share, and yet members still have substantial idled capacity that could be reactivated.
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