Oil Prices Surge 14% Amid US-Israeli Attack on Iran

UPDATE: Oil prices have surged sharply following a devastating attack by the United States and Israel on Iran on Saturday, resulting in the death of Iran’s supreme leader. The attack has triggered Iranian retaliatory strikes against US-aligned nations throughout the Middle East, escalating geopolitical tensions and causing significant disruptions in global oil supply.

The Strait of Hormuz, a critical maritime passage for approximately 20% of the world’s oil supply, has been effectively shut down by Iranian forces. Reports from the UK Maritime Trade Operations (UKMTO) indicate that at least two ships were struck—one near Oman and another off the coast of the UAE. Iranian state media reported that an oil tanker was hit and is sinking after attempting to “illegally” navigate through the strait.

In immediate response, major shipping companies have halted their fleets’ transit through the strait, raising alarm bells in the energy markets. Brent crude oil prices briefly spiked by nearly 14%, while West Texas Intermediate surged almost 12% at the start of the trading week.

This upheaval has sent shockwaves through global equity markets, with stocks in Tokyo, Hong Kong, Singapore, Mumbai, Bangkok, Wellington, and Taipei all experiencing significant declines. US futures also fell by more than 1% as investors reacted to the uncertainty. Airline stocks are taking a major hit, forced to cancel flights to the region.

Conversely, energy firms have seen their stocks rally, with companies like Woodside Energy and Santos jumping over 6%, while PetroChina gained nearly 4% in Hong Kong. Amid rising tensions, gold—a safe-haven asset—climbed 2%, and the US dollar strengthened as investors rushed towards safe assets.

In Iceland, industry representatives are attempting to downplay the immediate impact of surging crude prices. The Fuels for Ireland group stated that while reactions to geopolitical tensions are common, they do not anticipate drastic changes in Irish petrol prices in the short term. CEO Kevin McPartlan emphasized that the market is accustomed to managing short-term volatility.

However, analysts are warning that prolonged high oil prices could aggravate inflationary pressures globally. Charu Chanana from Saxo Markets noted that persistent increases could result in “stickier headline inflation,” potentially influencing monetary policy decisions by the Federal Reserve.

International responses are also intensifying. US President Donald Trump called for Iranians to rise against their government, suggesting that the conflict could last “four weeks.” Meanwhile, Iran’s Supreme National Security Council has firmly stated that they will not negotiate with the United States, countering reports of potential talks.

If the blockade of the Strait of Hormuz continues, experts warn that oil prices could soar above $100 per barrel, creating a substantial gap in supply that strategic reserves may not be able to close. Michelle Brouhard, an analyst at Kpler, described the high oil prices as a potential vulnerability for Trump, especially as mid-term elections approach.

As this situation continues to unfold, the global community remains on high alert. Keep an eye on developments surrounding oil supply and geopolitical tensions as the impact of this conflict resonates worldwide.

Stay tuned for further updates on this rapidly evolving story.