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14-06-2025
VIENNA: Oil prices jumped over $5 on Friday to multi-month highs after Israel launched strikes against Iran, sparking Iranian retaliation and raising worries about a disruption in Middle East oil supplies.
Brent crude futures were up $5.25, or around 7.6%, to $74.61 a barrel at 1215 GMT, after hitting an intraday high of $78.50, the highest since January 27.
Friday’s gains were the largest intraday moves for both contracts since 2022, after Russia’s invasion of Ukraine caused a spike in energy prices.
Israel said it had targeted Iran’s nuclear facilities, ballistic missile factories and military commanders on Friday at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon. Iran has promised a harsh response.
US President Donald Trump urged Iran to make a deal over its nuclear program, to put an end to the “next already planned attacks.”
The National Iranian Oil Refining and Distribution Company said oil refining and storage facilities had not been damaged and continued to operate.
The primary concern was whether the latest developments would affect the Strait of Hormuz, said SEB analyst Ole Hvalbye. The key waterway had been at risk of impact from increased regional volatility previously but had not been affected so far, Hvalbye said.
There also was no impact to oil flow in the region, he added.
About a fifth of the world’s total oil consumption passes through the strait, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel.
Goldman Sachs in a note on Friday said while it has incorporated a higher geopolitical risk premium into its adjusted summer 2025 oil price outlook, it continues to assume no disruptions to Middle East oil supply after Israel’s attacks on Iran.
“The key question now is whether this oil rally will last longer than the weekend or a week, our signal is that there is a lower probability of a full-blown war and the oil price rally will likely encounter resistance,” said Janiv Shah, analyst at Rystad.
“Fundamentals show nearly all Iranian exports going to China, so Chinese discounted purchases would be most at risk here. OPEC+ spare capacity can provide the stabilizing force,” he added.
In other markets, stocks dived and there was a rush to safe havens such as gold and the Swiss franc. An increase in oil prices would also dampen the outlook for the German economy, the economic institute DIW Berlin said on Friday. It is the only G7 nation that has recorded no economic growth for two consecutive years.
“There are two key factors at play; whether higher wholesale fuel prices are sustained over the coming days and, crucially, the sort of margin retailers decide to take,” he said.
In an extreme scenario, Iran could disrupt supplies of millions of barrels of oil a day if it targets infrastructure or shipping in the Strait of Hormuz.
The strait is one of the world’s most important shipping routes, with about a fifth of the world’s oil passing through it.
At any one time, there are several dozen tankers on their way to the Strait of Hormuz, or leaving it, as major oil and gas producers in the Middle East and their customers transport energy from the region.
Bounded to the north by Iran and to the south by Oman and the United Arab Emirates (UAE), the Strait of Hormuz connects the Gulf with the Arabian Sea.
“What we see now is very initial risk-on reaction but over the next day or two, the market will need to factor in where this could escalate to,” Saul Kavonic, head of energy research at MST Financial said. (Int’l Monitoring Desk)
