- Oil prices briefly surged after Israeli strikes on Iran, but gains eased as no major energy infrastructure was hit.
- Analysts warn prices could climb further if Iranian oil exports or regional shipping are disrupted.
- Both Iran and Israel have so far avoided targeting energy facilities, showing restraint to prevent wider market fallout.
- Fears over the potential closure of the Strait of Hormuz persist, but experts view it as an unlikely move due to its global implications.
Oil prices rose sharply following Israel’s recent strikes on Iran, raising concerns over potential disruptions to Iranian crude supply. While Brent crude futures briefly jumped over 10% on June 13—climbing above $78 per barrel—the rally eased later in the day, with prices settling around $73.15 per barrel by 16:00 GMT. Despite the market’s initial reaction, analysts believe the price increase may be short-lived unless critical energy infrastructure is affected, a scenario both sides appear to be avoiding.
Market Reacts to Tensions, but Supply Disruption Remains Key Variable
Following Israel’s strikes on military and nuclear facilities in Iran, Prime Minister Benjamin Netanyahu stated the operations would continue “for as many days as it takes.” In response, Iran labeled the strikes a “declaration of war” and launched around 100 drones toward Israel, many of which were intercepted by Israeli forces.
Goldman Sachs warned that if Iran’s oil export infrastructure were damaged, the country’s supply could drop by 1.75 million barrels per day for up to six months. Assuming OPEC+ offsets half of the shortfall using spare capacity, Goldman projects Brent could temporarily rise above $90 per barrel before easing back to the $60 range by 2026 as supply stabilizes.
Despite factoring in a higher geopolitical risk premium, Goldman Sachs maintains its base case outlook. The bank expects no significant supply disruption in the Middle East and forecasts Brent and WTI prices to fall to $59 and $55 per barrel, respectively, by Q4 2025, with further declines into 2026. The outlook is underpinned by expectations of strong non-shale supply growth globally.
Energy Infrastructure Remains Intact Amid Rising Tensions
Despite heightened hostilities, both Israel and Iran have so far avoided targeting critical energy infrastructure, a move analysts view as a deliberate measure to prevent further economic damage. This restraint likely reflects a mutual understanding that striking oil and gas facilities could severely impact domestic supply needs and broader export capabilities.
According to the Middle East Institute, energy assets are deeply connected to global markets, making them more than just strategic targets. Disruptions could trigger wide-ranging consequences beyond the immediate region. Iran operates around 2.2 million barrels per day of crude refining capacity and an additional 600,000 barrels per day in condensate splitting.
In May, Iran produced approximately 4 million barrels per day of crude and condensate, largely from fields in the western part of the country. However, crude exports were expected to dip below 1.5 million barrels per day for the same month. These shifts could squeeze refinery margins, especially across Asia. If Iranian crude exports are curtailed, Chinese refiners—the main buyers of Iranian oil—would be forced to seek alternative supplies from elsewhere in the Middle East or from Russia.
Strait of Hormuz at Center of Escalation Fears
Rising tensions between Israel and Iran have renewed concerns over the security of the Strait of Hormuz, a vital maritime chokepoint for global energy trade. Following a warning from U.S. President Donald Trump that future Israeli strikes could be “even more brutal,” fears have grown that Iran might retaliate by attempting to close the strait.
Roughly 20–25% of the global oil supply transits through the Strait of Hormuz, along with substantial volumes of liquefied natural gas (LNG) from Qatar and the UAE. While most Gulf nations heavily depend on this route to transport crude oil to international markets, only Saudi Arabia and the UAE have pipelines that can bypass the Strait via alternative overland routes.
Israel has reportedly issued a deadline of June 15 for Iran and the U.S. to reach a nuclear agreement, citing stalled negotiations as the catalyst for its recent actions. Although several rounds of indirect talks have been held between Washington and Tehran, both Israel and the U.S. remain firmly opposed to any deal that permits Iran to enrich uranium.
On June 12, Iran’s atomic energy chief confirmed that a third enrichment facility was ready for centrifuge installation. That same day, the International Atomic Energy Agency formally ruled that Iran had violated its non-proliferation commitments, a first in two decades, adding further strain to already fragile regional dynamics.
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Source: S&P Global
