Oil Prices Surge Amid Middle East Tensions, Strait of Hormuz Supply at Risk
Oil prices surged sharply on Wednesday as escalating tensions in the Middle East disrupted global energy supplies, sending benchmarks to multi-month highs. Brent crude climbed $2.67, or 3.3%, to $84.07 a barrel, marking its highest close since January 2025, while US West Texas Intermediate (WTI) rose $2.24, or 3%, to $76.80 per barrel. Both benchmarks have gained roughly 5% over the past two trading sessions, reflecting growing market anxiety.
The spike comes amid conflict involving the United States, Israel, and Iran, with military strikes targeting Iranian sites prompting retaliatory attacks on energy infrastructure. Analysts warn that unless clear de-escalation occurs, bullish momentum in oil prices is likely to continue. “The primary near-term driver for oil prices remains the US-Iran conflict,” said Kelvin Wong, senior market analyst at OANDA, noting that there are no signs yet of easing tensions.
Iraq, the second-largest OPEC crude producer, has cut output by nearly 1.5 million barrels per day due to storage and export bottlenecks, with officials warning that up to 3 million barrels per day could be shut in if exports fail to resume. Meanwhile, the Strait of Hormuz, a critical chokepoint for nearly 20% of global oil and liquefied natural gas, has seen traffic effectively halted after Iran targeted passing tankers, deepening global supply concerns.
Governments and companies are taking action to mitigate risks. US President Donald Trump suggested naval escorts for oil tankers through the strait and authorized financial guarantees to support maritime trade in the Gulf. Analysts, however, caution that these measures may take time to stabilize markets. Energy-hungry nations, including India and Indonesia, are seeking alternative sources, while some Chinese refineries are adjusting operations in response to supply uncertainties.
In the US, crude inventories rose unexpectedly by 5.6 million barrels last week, according to American Petroleum Institute estimates, exceeding forecasts and highlighting the complex dynamics in global oil markets. As diplomatic efforts show little immediate progress, traders remain on edge, monitoring developments in one of the world’s most strategically vital oil corridors. The combination of military tensions and export constraints keeps Middle East oil tensions at the forefront of global market risks.
source: Arise