Crude oil prices surge to a peak not seen for half a year.
oil prices just can't seem to stay low these days, with Brent crude oil once again soaring past the $79 per barrel mark after Israel's attack on Iran. The conflict, which started back on June 13, 2025, has sent chills down the spine of the global oil market, sparking concerns about potential disruptions to critical oil shipping routes like the Strait of Hormuz.
Israel launched their preemptive strike on Iran's nuclear program, missile factories, and military capabilities, according to Prime Minister Benjamin Netanyahu. In response, Iran has been bombarding Israeli cities with rocket attacks and deploying drones.
The crude oil market actually saw an initial increase of about 7% overnight after the attacks, with prices tipping towards $77 per barrel as of June 20, 2025. Goldman Sachs has even estimated a geopolitical risk premium of around $10 per barrel, meaning the conflict could push prices even higher if it escalates further or if key shipping chokepoints are disrupted.
The Strait of Hormuz is a major chokepoint for global oil supply, handling around 20% of the world's petroleum liquids consumption. Both Saudi Arabia and the UAE rely heavily on this route for exports, making them vulnerable to any military escalations or disruptions in the region. If the Strait is compromised, it could seriously restrict exports and alternative supply sources, leading to price shocks and potentially pushing Brent crude oil prices towards or beyond $120 per barrel.
Despite these concerns, the global oil market has shown some resilience due to factors like depressed global demand from slower economic growth and voluntary production cuts by OPEC+ members. However, the geopolitical risks remain high and prices volatile as the conflict continues to unfold, with ongoing strikes by Israel on Iranian targets and Iran refusing to engage in nuclear talks under current conditions.
So, it looks like we might be seeing these oil prices stay high for a while as the Israel-Iran situation continues to evolve.
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The ongoing Israel-Iran conflict, particularly the potential disruptions to the Strait of Hormuz, could significantly impact the global oil industry, potentially driving crude oil prices towards or beyond $120 per barrel. Finance experts like Goldman Sachs have predicted a geopolitical risk premium of around $10 per barrel, reflecting the market's heightened vulnerability to this volatile situation.
