Oil prices jumped sharply on Monday as fears of supply disruptions intensified following a wave of U.S. and Israeli strikes on Iran.
At 08:20 ET (13:20 GMT), Brent crude futures surged 8.6% to $79.14 per barrel after earlier reaching their highest level since January 2025. West Texas Intermediate (WTI) crude climbed 7.8% to $72.25 per barrel, trading just below its strongest level since June.
Oil rallies on Middle East escalation
Over the weekend, the United States and Israel carried out major military strikes on Iran, reportedly killing hundreds, including Supreme Leader Ayatollah Ali Khamenei and other senior officials. The attacks marked a significant escalation in the ongoing tensions between Washington and Tehran.
Iran responded with missile strikes targeting Israel and several U.S.-allied nations in the Middle East, including Bahrain, Kuwait, Qatar and the United Arab Emirates. Reports also indicated that Iran targeted ships transiting the Strait of Hormuz, raising concerns about immediate disruptions to global oil supplies.
Analysts at ANZ noted that retaliatory attacks on oil tankers in the Strait of Hormuz have substantially increased the threat to energy supplies. The waterway is one of the world’s most critical oil transit routes, with around 20% of global oil consumption passing through it.
U.S. President Donald Trump said military operations against Iran would continue in the coming days and warned that further casualties among American personnel were possible. The latest strikes represent the second major U.S. operation against Iran since mid-2025, largely tied to disputes over Tehran’s nuclear program. Negotiations between the two countries recently ended without a clear resolution.
In June 2025, the United States had also targeted key Iranian nuclear facilities in an effort to curb the country’s enrichment activities.
Market analysts warned that the situation remains highly fluid. Nikos Tzabouras, Senior Market Analyst at Tradu.com, said a prolonged conflict and sustained shipping disruptions could overturn current market fundamentals and push crude prices significantly higher, potentially bringing the $100 per barrel level into focus.
Several banks expect oil to remain elevated in the near term. Analysts at Texas Capital said prices could spike toward $80 per barrel in the coming week as combat operations continue. Barclays added that while oil often experiences a sharp spike followed by a pullback, it cannot rule out a sustained move toward $90–$100 Brent if supply disruptions persist.
OPEC+ boosts output
Separately, OPEC+ agreed on Sunday to increase oil production by 206,000 barrels per day. The move is aimed at stabilizing markets and potentially offsetting supply risks stemming from the U.S.-Iran conflict.
However, it remains uncertain whether all member countries will fully implement the agreed production increase. In addition, shipping disruptions in the Strait of Hormuz could limit the impact of higher output.
The latest decision marks OPEC’s first production hike since late 2025. The group had previously raised output by approximately 2.5 million barrels per day throughout 2025 before pausing increases in November.
Although crude prices initially surged on geopolitical concerns, gains were partially trimmed after news of the OPEC+ production increase, which may help ease potential supply shortages.
Overall, oil markets remain highly sensitive to developments in the Middle East, with Brent crude and WTI prices likely to stay volatile as investors assess the risk of further escalation.
