US strikes on Iranian nuclear facilities increase oil supply risks and geopolitical tensions

From Investing.com: 2025-06-23 04:58:00

The US bombing of Iranian nuclear facilities over the weekend has significantly increased supply risks for the oil and LNG market. Iran’s response remains uncertain, with potential disruptions to shipping flows through the crucial Strait of Hormuz, where a quarter of seaborne oil trade and 20% of global LNG trade passes through.

There is a possibility of diverting some oil flows through alternative pipelines in Saudi Arabia, the UAE, and Iran, but with over 20 million barrels per day moving through the Strait of Hormuz, a significant amount of oil remains at risk. Disruptions by Iran’s proxies at other choke points could further escalate the situation.

Reports suggest that the Iranian parliament has backed the closing of the Strait of Hormuz, but the final decision lies with the country’s national security council. Blocking the strait could have severe consequences on oil flows and prices, potentially triggering a swift response from the US and impacting Asian markets heavily.

While the market currently doubts the likelihood of a successful blockade of the Strait of Hormuz, the geopolitical risks have significantly increased. Supply risks for Iranian oil are also heightened due to ongoing Israeli strikes on Iran. Revised oil forecasts project higher prices, with a third-quarter average of $70/bbl and a fourth-quarter forecast of $64/bbl, subject to further revisions in case of supply disruptions.



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