Oil Prices Skyrocket Over 10% as Israel-Iran Tensions Threaten Global Energy Crisis

The climate of rising tension in the Middle East triggered a strong reaction in global energy markets, with a significant increase in international oil prices exceeding 10% during the early hours of this Friday.

This surge followed Israel’s announcement of a “preemptive strike” against Iran, heightening fears of a potential disruption in crude oil supply in a region critical to global energy trade. As a security measure, Israel ordered the temporary closure of its embassies in various locations worldwide, a decision reflecting the severity of the conflict and its impact on global diplomatic relations.

Major oil contracts saw immediate increases following the announcement. West Texas Intermediate (WTI), the U.S. market benchmark, rose 10.41%, trading at $75.10 per barrel. Meanwhile, North Sea Brent crude, the global standard, climbed 10.15%, reaching $76.40 per barrel.

These increases reflect investor uncertainty about the possibility of the Middle East conflict leading to restrictions in oil supply, particularly in a region that accounts for a significant portion of global crude production and transportation.

West Texas Intermediate (WTI), the U.S. market benchmark, rose 10.41% in a day. Source: TradingEconomics.

The Strait of Hormuz: A Critical Chokepoint

The escalation of tensions between Israel and Iran has raised concerns about stability in the Persian Gulf, a strategic region for energy trade. On Wednesday, the British maritime agency issued a warning indicating that rising tensions could trigger a military escalation affecting navigation in critical areas such as the Gulf of Oman and the Strait of Hormuz, both of which border Iranian territory.

The Strait of Hormuz, in particular, is considered a vital artery for global oil trade, with approximately 20% of the world’s crude passing through it.

Arne Rasmussen, an analyst at Global Risk Management, highlighted the scale of the risk on LinkedIn: “For the oil market, the absolute nightmare is the closure of the Strait of Hormuz.

If Iran blocks this point, it could disrupt up to 20% of global oil flows.” While some analysts consider this scenario low-risk, it would have devastating consequences for the global economy.

Brent crude, the global standard, climbed 10.15% in a day. Source: TradingEconomics.

Adding to the geopolitical uncertainty is another factor contributing to the upward trend in oil prices: a recent decline in U.S. commercial crude inventories. According to recent data, U.S. inventories fell by 3.6 million barrels, indicating a reduction in available supply in one of the world’s largest consumer markets.

Although this decline is not directly related to Middle East events, it exacerbates pressure on prices, as the combination of lower supply and geopolitical instability creates a conducive environment for sustained increases in crude prices.

Outlook and Future Risks

The situation in the Middle East remains highly volatile, and any new incident could further escalate tensions and reverse current market trends. Major energy consultancies are revising their projections in real time, emphasizing that the geopolitical risk premium will remain a key factor in oil prices in the short and medium term.

Investors, meanwhile, are closely monitoring every diplomatic statement and military movement, aware that any escalation could directly impact global crude supply and, consequently, the world economy.

In parallel, other external factors, such as OPEC+ production policies and supply-demand dynamics in key markets, could either amplify or mitigate pressures on prices.

However, as long as uncertainty persists in the Middle East, the oil market will continue to reflect the fragility of the geopolitical situation, with consequences that extend beyond the region’s borders and affect consumers, businesses, and governments worldwide.