Oil Prices Soar Amid Escalating Israel-Iran Conflict

HONG KONG, June 13 (Reuters) — Oil prices surged Friday after Israel launched strikes against Iran, raising concerns of escalating tensions in the Middle East that could disrupt global energy supplies. Brent crude oil jumped more than 10%, reaching $74.23 a barrel, marking its highest level since January before slightly easing.

Traders reacted strongly to Israel’s military actions, which reportedly targeted Iran’s nuclear and missile facilities, leading to fears that such a conflict could significantly affect oil production in the region. Following the initial spike, Brent crude ended the day 7% higher than Thursday’s close.

The rise in oil prices has immediate implications for consumers, as crude oil prices are a primary driver of fuel costs. The average price of gasoline in the U.S. currently stands at $3.13 per gallon. Industry experts predict that gas prices may rise by 10 to 25 cents in response to the current market conditions.

Stock markets also reacted to the heightened tensions, with major indices in Asia and Europe closing down. The Dow Jones Industrial Average fell 1.79%, while the S&P 500 dropped 1.13%.

“It’s an explosive situation, albeit one that could be defused quickly,” said Vandana Hari, an analyst at Vanda Insights. “Or it could spiral into a bigger conflict that disrupts oil supply from the Middle East.”

As investors flocked to safe-haven assets, gold prices rose 1.2%, reaching $3,423.30 an ounce. The Swiss franc also gained as traders moved to more reliable investments amid uncertainty.

Iran’s Supreme Leader Ayatollah Ali Khamenei threatened severe retaliation against Israel, further complicating the situation. U.S. Secretary of State Marco Rubio stated that the U.S. had no involvement in Israel’s operations but warned Iran against targeting U.S. interests.

The situation has generated speculation about the potential impact on oil supplies from the Strait of Hormuz, a crucial passage for petroleum transport where approximately one-fifth of the world’s oil supply flows. A severe escalation could lead to significant disruptions and spike oil prices above $100 a barrel, analysts warn.

“Should oil exports through the Strait of Hormuz be affected, we could see $100 oil,” said energy analyst Andy Lipow. The outcomes of the Israeli strikes and Iran’s subsequent response remain uncertain, but analysts expect that the conflict could significantly influence global oil prices in the ensuing days.