Oil Prices Surge Over 3 Percent Amid Escalating US-Israel-Iran Conflict

Oil prices jumped more than three percent on Thursday, extending a rally as fears grew over disruptions to Middle East oil and gas supplies due to the escalating conflict involving the United States, Israel, and Iran.

Brent crude rose $2.65, or 3.26 percent, to $83.99 per barrel by 08:20 am Saudi time, marking a fifth consecutive session of gains. US West Texas Intermediate crude increased $2.76, or 3.70 percent, to $77.42 per barrel. Analysts at ANZ noted that crude markets remain highly sensitive to ongoing risks to supply, particularly through the Strait of Hormuz, a crucial shipping lane for global oil and gas.

The latest surge followed a wave of Iranian missile attacks on Israel early Thursday, forcing millions into bomb shelters as the conflict entered its sixth day. The attacks came shortly after Washington blocked moves to halt a US air assault. On Wednesday, a US submarine sank an Iranian warship off Sri Lanka, reportedly killing at least 80 personnel, while NATO forces intercepted an Iranian ballistic missile aimed at Turkiye.

Reports indicate that Iranian forces have targeted oil tankers in or near the Strait of Hormuz, with explosions near a tanker off Kuwait, according to UK Maritime Trade Operations. The intensifying conflict coincides with Tehran’s political transition, as the powerful son of Iran’s slain supreme leader emerged as a likely successor, signaling that Iran is unlikely to ease pressure.

Regional supply constraints are worsening the market impact. Iraq, the second-largest OPEC crude producer, cut output by nearly 1.5 million barrels per day due to storage limitations and disrupted export routes. Qatar, the Gulf’s largest liquefied natural gas producer, declared force majeure on gas exports Wednesday, with sources indicating it could take at least a month to restore normal production levels.

Shipping disruptions are extensive. Reuters estimates show that at least 200 vessels, including oil and LNG tankers, are anchored off the coasts of Iraq, Saudi Arabia, and Qatar, while hundreds more remain outside the Strait of Hormuz unable to reach ports. The waterway handles roughly a fifth of the world’s oil and LNG supply.

China has responded to the turmoil by asking companies to halt new contracts for refined fuel exports and to attempt to cancel existing shipments, according to industry sources.

Traders remain bullish on oil prices, noting that a quick resolution to the conflict appears unlikely. The combination of rising geopolitical tensions, disrupted production, and shipping constraints has left global markets on edge, pushing crude prices higher and raising concerns over energy security.