Geopolitical tensions post Israel strike cause oil prices to surge, Brent may reach $80+
From Yahoo Finance: 2025-06-12 23:36:00
Israel’s strike on Iran has heightened geopolitical risk in the oil market, causing Brent crude to surge over 13%. Concerns about global economy and OPEC+ supply increases have shifted to fears of a supply deficit. Market experts predict Brent could reach $80 or higher if tensions escalate further.
Iran’s potential retaliation poses a risk to global oil supply. Shipping disruptions in the Strait of Hormuz could put 14 million barrels per day at risk, potentially driving prices to $120 per barrel. Analysts warn of the possibility of Brent reaching new record highs if conflicts persist.
Market strategists anticipate oil prices could spike towards $80 if Middle East tensions escalate. However, rising OPEC+ output may counteract gains and revive oversupply concerns. A worst-case scenario could lead to a significant impact on global oil supply and inflation expectations.
Iran’s oil output has risen to 4 million barrels per day, but potential retaliations pose a risk. Analysts believe the conflict is unlikely to escalate into a full-blown war due to the US’s goal of negotiation. Traders remain cautious amid escalating tensions between Iran and Israel.
Oil investors are securing supplies ahead of the weekend due to the worsening situation. Technical short-covering may be contributing to the recent rise in oil prices. Analysts predict an upward trend as the conflict escalates further.
An energy analyst warns that Iranian retaliation could draw the US and other parties into the conflict. If the conflict escalates to attacks on oil infrastructure, up to 20 million barrels per day of oil supply could be hindered. However, there are no signs of this extreme scenario yet.
A brewing conflict in the Middle East could impact freight rates. At least 15% of the global very-large crude carrier fleet is in the Middle East Gulf at any given time. An increase in freight rates is likely in the short term due to the threat of war.
The crude oil market may see a short-term upside potential of $3 to $5 based on previous conflicts between Iran and Israel. Prices have already factored in expectations of escalation. Analysts suggest investors consider hedging against geopolitical risks with low-cost call options.
Despite limited support from macroeconomic factors, investors may consider buying call options to hedge against extreme geopolitical risks. Once the situation clarifies, they can position for short-selling at higher levels. The market continues to monitor the escalating tensions in the Middle East for potential impacts on oil prices.
Read more: Oil Outlook in Flux as Analysts Revise Views After Israel Strike