Oil prices jump as Mideast tensions escalate

IANS June 16, 2025 249 views

Oil prices spiked sharply as tensions between Israel and Iran escalated, with Brent crude briefly jumping 5.5%. The conflict has raised fears of supply disruptions, particularly if the critical Strait of Hormuz is targeted. Analysts expect a temporary price surge but warn of prolonged volatility if the situation worsens. Iran's role as a key oil producer and its strategic position near the Strait add further risks to global supply.

"Oil is the fever measure of such conflicts, and prices spiked accordingly." — Norbert Rucker, Julius Baer
New Delhi, June 16: Oil prices in the international market jumped further on Monday after the Mideast tensions escalated between Israel and Iran.

Key Points

1

Brent crude briefly surged 5.5% to $75/barrel

2

Israel attacked Iran's South Pars gas field, halting production

3

Analysts warn of prolonged price hikes if Strait of Hormuz is blocked

4

Iran produces 3.3M barrels/day, with China as top importer

Brent climbed as much as 5.5 per cent before paring most gains to trade around $75 a barrel.

Israel launched an attack on the giant South Pars gas field, forcing the halt of a production platform, according to reports.

According to analysts, they do not expect to see another significant leg higher in crude prices unless there are attempts to close the Strait of Hormuz or Iran-backed Houthis in Yemen target shipping.

Norbert Rucker, Head Economics and Next Generation Research, Julius Baer, said oil is the fever measure of such conflicts, and prices spiked accordingly.

“The situation remains in flux, and the coming days and weeks will show how far the escalation goes. Our best guess is that this latest conflict eruption follows the usual pattern, with prices rising temporarily before returning to previous levels. The oil market is very resilient today and supplies are unlikely at risk,” he mentioned.

“Our best guess is that oil prices will follow the usual pattern around such geopolitical events, with prices rising temporarily before returning towards previous levels. The peak and duration of this pattern depends on the intensity of the conflict, but historically averaged below 20 per cent in price gains and a length of up to three months,” according to Rucker.

The Israeli action comes in the backdrop of talks on a nuclear deal between the US and Iran having soured and Tehran stating that if it is attacked it would retaliate against US bases in Iraq and adjoining countries. The US has asked some of its personnel there to exit.

According to a report by Emkay Global, Iran produces around 3.3 million barrels per day (mbpd) of crude oil (3 per cent of global production) and exports around 1.5 mbpd, with China being the main importer (80 per cent), followed by Turkey.

Iran is also on the northern side of the Strait of Hormuz/Persian Gulf through which 20 mbpd+ of oil trade flows, with Saudi Arabia and the UAE etc also shipping, and in the past it has warned of blocking the same.

Hence a wider Middle East conflict with impact on Saudi, Iraq, Kuwait and UAE oil supplies can lead to a sharp spike in oil prices.

—IANS

Reader Comments

Here are 6 diverse Indian perspective comments on the oil price surge due to Middle East tensions:
R
Rahul K.
This is really worrying for our economy. Petrol prices in India are already too high, and any further increase will hit common people hard. Our government should consider releasing some strategic reserves to cushion the impact. 🛢️
P
Priya M.
Why does India always have to suffer because of conflicts we have nothing to do with? We should accelerate our renewable energy plans and reduce dependence on imported oil. Solar power is the future!
A
Amit S.
The timing couldn't be worse with summer travel season starting. Airfares will shoot up again. Maybe this is nature's way of telling us to take more trains instead of flights? 🚆
N
Neha P.
While I understand the economic concerns, we must also think about the human cost of these conflicts. Innocent civilians suffer the most in these situations. Hope diplomatic solutions are found soon.
S
Sanjay V.
This shows why we need strong relations with both US and Iran. Our foreign policy should be balanced - we buy oil from Iran but also have strategic ties with America. Tough balancing act!
K
Kavita R.
The government should seriously consider capping fuel prices temporarily. Middle class families are already struggling with inflation. Another price hike will break our budgets completely. 😔

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Tags:
oil prices Israel Iran conflict Brent crude Middle East tensions Strait of Hormuz