Oil Prices Jump as Israel Strikes Iranian Nuclear Sites, Markets Eye Risk of Wider Conflict

Oil prices rose sharply on Thursday following reports that Israel carried out overnight airstrikes on Iranian nuclear facilities in Natanz and Arak, fuelling fears of a broader conflict in the Middle East that could disrupt global crude supplies.

Brent crude futures climbed 88 cents, or 1.15%, to $77.58 per barrel by 10:08 a.m. Saudi time. The international benchmark had gained 0.3% the previous day, despite swinging wildly with intraday losses of up to 2.7%.

U.S. West Texas Intermediate (WTI) crude for July delivery rose $1.11, or 1.48%, to $76.25 per barrel, after closing 0.4% higher in the previous session. The more actively traded August contract also gained 92 cents, or 1.25%, to reach $74.42 a barrel.

The escalation in hostilities between Israel and Iran has injected fresh volatility into oil markets. “There is still a healthy risk premium baked into the price as traders await to see whether the next stage of the Israel-Iran conflict is a U.S. strike or peace talks,” said Tony Sycamore, a market analyst at IG, in a client note.

Goldman Sachs on Wednesday estimated that geopolitical risks are adding a $10-per-barrel premium to oil prices and warned that any wider disruption could push Brent above $90. The investment bank cited reduced Iranian output and the looming threat to key shipping lanes as major concerns.

The conflict has now entered its seventh day. Former U.S. President Donald Trump, who is seeking a return to office, told reporters on Wednesday that he may or may not back Israeli actions with American military support — further stoking uncertainty in the region. “Markets remain jittery, awaiting firmer signals that could influence global oil supply and regional stability,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Analysts also warned that if Iran feels existentially threatened, it could retaliate against oil tankers and energy infrastructure in the Gulf. “The risk of major energy disruptions will rise significantly if Iran perceives its survival is at stake,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

Iran, a key OPEC member, currently produces around 3.3 million barrels of crude oil per day. Roughly 19 million barrels per day of oil and petroleum products pass through the Strait of Hormuz — a critical chokepoint bordering southern Iran — heightening concerns over potential trade disruption.

Separately, the U.S. Federal Reserve left interest rates unchanged on Wednesday but signalled two possible cuts by year-end. Fed Chair Jerome Powell noted that future moves would be “data-dependent,” with inflation risks likely to increase due to Trump’s proposed import tariffs. Lower interest rates typically boost economic activity and oil demand, though they could also worsen inflationary pressures.