Oil Prices Surge to $80 Amid Widening US-Israel Conflict With Iran, Raising Supply Risk Fears

Oil prices continued their sharp climb on Tuesday, reflecting growing fears of supply disruptions as the US-Israel conflict with Iran escalates. Brent crude futures rose $3.15, or 4.1 percent, to $80.89 a barrel by early trading, marking the third consecutive day of significant gains. On Monday, Brent briefly surged to $82.37, its highest level since January 2025, before settling 6.7 percent higher. Meanwhile, US West Texas Intermediate crude rose $2.55 to $73.78 a barrel.

The spike comes amid heightened tensions in the Middle East, where Israeli and US airstrikes have expanded into Lebanon, while Iran has retaliated by targeting energy infrastructure in Gulf countries and striking tankers in the Strait of Hormuz. The waterway, which handles roughly 20 percent of the world’s oil, is seeing reduced traffic as insurers cancel coverage for ships, causing global shipping rates to soar.

Market analysts warn that the risks are mounting with no immediate end to the conflict in sight. “The Strait of Hormuz is effectively closed, and Iran has shown a willingness to target energy infrastructure,” said Tony Sycamore, IG market analyst. ING analysts echoed the concern, noting that additional Iranian attacks on regional oil facilities could cause prolonged supply outages and sustain high prices.

The political backdrop adds further uncertainty. Israeli Prime Minister Benjamin Netanyahu cautioned that the war could take some time to resolve, though he does not expect it to last years. In response, investment firms like Bernstein have revised their Brent oil forecasts upward, projecting $80 per barrel for 2026, with extreme conflict scenarios potentially pushing prices to $120–$150.

Refined oil products are also feeling the pressure. US ultra-low-sulfur diesel futures hit a two-year high, while gasoline futures continued their upward trend. European gasoil futures surged as well, reflecting the global reliance on Middle Eastern fuel supplies and the vulnerability of key refining operations. Recent drone strikes, including the shutdown of Saudi Arabia’s largest domestic refinery, underscore the growing threat to energy infrastructure.

source: Reuters