Crude oil prices continued higher today as the war between Israel and Iran continued unabated, fuelling worry that oil supply from the biggest exporting region may be under threat of disruption.
Oil prices continued to rise on Tuesday afternoon, following a dip in Monday’s trading session. Today’s oil price action follows Friday’s biggest intraday surge in three years following the Israeli strikes on Iran.
The market’s worst fear—a major supply disruption in the Middle East—hasn’t materialized yet. And it may not, as was the case in the previous Israel-Iran flare-ups in recent years.
Oil prices are likely to remain capped below $80 per barrel despite the escalating Israel-Iran conflict, research firm Rystad Energy said on Monday, as Iran and Israel continue to trade strikes with the escalation now in its fourth day.
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.
World oil demand rose by 990,000 barrels per day in the first quarter of 2025, but the remainder of the year will see demand growth at just 650,000 bpd, the International Energy Agency said in its latest monthly report on oil, citing record sales of electric cars and weaker economic growth globally. As a result, the IEA put its full-2025 oil demand growth forecast at 740,000 barrels daily.
“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” U.S. Commerce Secretary Howard Lutnick said, as quoted by Reuters. “The idea is we’re going to go back and speak to President Trump and make sure he approves it. They’re going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework.”
Saudi Aramco cut the price of its main oil grade to buyers in Asia after OPEC+ continued with its outsized output increases for a third month.
The Saudis led the producer group over the weekend in agreeing to raise production by 411,000 barrels a day in July, a third straight month of outsized hikes. In tandem with US President Donald Trump’s trade war, the supply increases have helped drive benchmark oil prices about 12% lower in London since early April.
When the European Commission started briefing EU states last month on the next sanctions package expected to be imposed on Russia, the 27 member nations expected concrete written proposals to follow. They’re still waiting.
Normally these sorts of documents — in this case the potential 18th round of restrictive measures since the Kremlin’s full-scale invasion of Ukraine was launched more three years ago — are provided only a few days after the briefings, or “confessionals” as they are known in Brussels.
OPEC+ did what everyone expected it to do last weekend, announcing another production ramp-up. Prices, however, did something that not everyone expected them to do: they went up. All eyes are now on demand—and the disruption of supply.
It is highly unlikely that anyone with even a modicum of intelligence has lost money in the past ten years or so by trading against the predictable thinking of those in charge of Saudi Arabia’s oil policy. Quite the reverse, in fact, with enormous profits available from the failures of the enormously well-flagged and exceptionally predictable strategy of the 2014-2016 and 2020 Oil Price Wars — launched by the Kingdom with the intention of destroying or disabling the U.S. shale oil sector, as analysed in full in my latest book on the new global oil market order. As OPEC members and their toxic companion in the OPEC+ formation, Russia, mull keeping oil production on the high side of recent historical averages, the key question for the oil markets is — surely they are not going to launch another oil price war using the same strategy as failed twice before?