As the Israel-Iran conflict shows no signs of abating, oil supply from the Middle East could become vulnerable if the two sides decide to attack vital energy infrastructure in the region, RBC Capital Markets said, warning that energy, and oil in particular, are now “clearly in the crosshairs.”
Global tanker operators and shipping authorities have taken decisive action, even without an official closure of the Strait of Hormuz, amid escalating tension between Israel and Iran. Their public statements, route shifts, and risk assessments are reshaping freight scheduling, insurance premiums, and–most significantly–energy market sentiment in real time.
Israel launched a series of airstrikes on Tehran’s critical energy infrastructure early Sunday, setting ablaze the city’s main gas depot and a major oil refinery, as the conflict with Iran intensified into its most destructive phase yet. The attacks, part of a broader Israeli offensive targeting Iran’s energy sector, have heightened fears of a wider regional war and sent ripples through global oil markets.
Oil jumped and stocks slid after Israel attacked Iran’s nuclear program facilities and killed senior military commanders in a significant escalation of tensions in the Middle East.
Crude oil analysts are in a rush to revise their forecasts in the wake of Israel’s attacks on Iran as geopolitics trumps fundamentals yet again.
“Oil could spike toward $80 if Middle East tensions escalate and supply risks materialize, but rising OPEC+ output may cap gains and revive oversupply concerns into autumn,” Saxo Markets chief investment strategist Charu Chanana said, as quoted by Bloomberg.
In exchange, Tehran is seeking formal U.S. recognition of its right to enrich uranium for civilian purposes under the Non-Proliferation Treaty (NPT) and the release of billions in Iranian assets currently frozen abroad.
“We had some very good talks with Iran yesterday and today, and let’s see what happens,” Trump told reporters on Sunday at the Morristown Airport in New Jersey on his way back to Washington. “I don’t know if I’ll be telling you anything good or bad over the next two days, but I have a feeling I might be telling you something good.”
The prospect of ending U.S. sanctions against Iran looked rather distant just a couple of weeks ago, but now President Trump is signaling that he wants to make a deal and is serious about it. Lifting the sanctions would have significant implications for the oil market—and some unintended consequences.
Crude oil prices rose sharply earlier today following reports on Tuesday that Israel had plans to attack Iranian nuclear facilities.
At the time of writing, Brent crude was trading at $66.37 per barrel, with West Texas Intermediate at $62.56 per barrel, after CNN reported late on Tuesday that new intelligence obtained by the U.S. suggested the Israeli government was considering strikes on Iranian nuclear sites.
Oil fell for a second day after President Donald Trump said the US and Iran are getting closer to a deal regarding Tehran’s nuclear program, a move that could unleash more supplies onto a market that is rapidly approaching a glut.