Oil prices jump as Iran conflict disrupts flows
Brent tops $82 as Middle East exports stall and Iraq curbs output amid Iran strikes and tanker attacks in the Strait of Hormuz.
Oil prices climbed more than $1 on Wednesday as fighting between the United States, Israel and Iran disrupted Middle East supplies and choked exports through critical shipping lanes.
Brent crude rose $1.11, or 1.4%, to $82.53 a barrel. It had closed at its highest level since January 2025 a day earlier. US West Texas Intermediate crude gained 79 cents, or 1.1%, to $75.37 after settling at its highest since June.
The advance followed fresh strikes by Israeli and US forces on Iranian targets on Tuesday. Tehran responded with attacks on energy infrastructure across the Gulf, a region that accounts for just under one-third of global oil production, according to the International Energy Agency.
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Iraq, OPEC’s second-largest producer, has cut output by nearly 1.5 million barrels per day, officials had told Reuters. That equates to roughly half its production capacity. They warned that nearly 3 million bpd could be shut within days if exports fail to resume due to storage constraints and blocked routes.
The disruption adds strain to a market already sensitive to supply risks. OPEC data show Iraq produced around 4 million bpd earlier this year, underscoring the scale of potential losses. Any sustained outage would tighten global balances, especially during peak Northern Hemisphere summer demand.
Iran has also targeted commercial vessels in the Strait of Hormuz. The waterway carries about 20% of global oil and liquefied natural gas flows, according to the US Energy Information Administration. Maritime traffic remained effectively halted for a fourth straight day after Iran attacked five ships, shipping sources said.
The Strait of Hormuz links Gulf producers including Saudi Arabia, Iraq, the United Arab Emirates and Kuwait to global markets. Analysts estimate that roughly 17 to 18 million bpd transit the chokepoint daily. Prolonged closure would disrupt not only crude exports but also refined fuels and LNG shipments.
US President Donald Trump said the US Navy could begin escorting tankers if required. He added that the US International Development Finance Corporation would offer political risk insurance and financial guarantees for Gulf maritime trade. The comments tempered some price gains as traders weighed potential mitigation measures.
However, shipowners and maritime analysts questioned whether naval escorts and insurance support would quickly restore confidence. War risk premiums for vessels transiting the Gulf have surged in recent days, according to shipping brokers. Some operators have opted to delay sailings rather than risk exposure.
Asian buyers began seeking alternative supplies. India and Indonesia said they were exploring other energy sources to safeguard domestic demand. Several Chinese refiners moved up maintenance schedules or temporarily shut units, traders said, reflecting concerns over feedstock availability and freight costs.
Saudi Arabia’s state oil giant Aramco is attempting to reroute some exports via the Red Sea to bypass Hormuz, sources said. The kingdom has an east-west pipeline linking its Gulf fields to Red Sea terminals, offering limited spare capacity during emergencies.
In the United States, crude inventories rose by 5.6 million barrels last week, market sources said, citing figures from the American Petroleum Institute. Analysts had expected a 2.3 million-barrel increase. Official data from the Energy Information Administration were due later on Wednesday.
Higher US stockpiles could ease near-term supply concerns in the world’s largest oil consumer. Yet traders said geopolitical risk remained the dominant driver. Brent futures have gained sharply this month as conflict escalated and physical cargoes were delayed.
The International Monetary Fund has previously warned that sustained oil price spikes can slow global growth and lift inflation. A prolonged disruption in the Gulf would test central banks already balancing inflation risks against slowing activity.
Oil prices forecast
Brent could surge toward $100 if Strait of Hormuz disruption persists amid escalating Iran conflict, analysts warn.
Oil prices could climb toward $100 a barrel if the conflict involving Iran deepens and disrupts flows through the Strait of Hormuz, according to market analysts cited by Barron’s.
Brent crude has already surged into the mid-$80s per barrel as geopolitical tensions intensified. Traders are pricing in a growing risk premium as military action threatens supply routes in the Middle East.
Analysts say the worst-case scenario for oil is now in play. If shipping through the Strait of Hormuz remains effectively blocked, crude prices could rise into the $100 to $120 range. The waterway handles roughly 20% of global seaborne oil flows, making it one of the world’s most critical energy chokepoints.
Market volatility has increased sharply since the escalation. While broader financial markets have not entered full panic mode, risk sentiment remains fragile. Investors are closely tracking tanker movements and any signs of naval intervention to secure shipping lanes.
Forecasts are increasingly tied to the duration and scale of the conflict. If Iran’s actions continue to disrupt maritime traffic and exports, analysts expect oil to enter a stronger geopolitical risk phase. That would likely push prices beyond the $90 level in the near term.
Some institutions have begun revising their baseline projections higher for 2026, reflecting prolonged uncertainty. Even central forecasts that were previously neutral now account for elevated geopolitical risk.
Higher crude prices carry wider economic consequences. Central bankers have warned that sustained energy shocks could fuel inflation and weigh on global growth. A prolonged spike would complicate monetary policy decisions in major economies already facing price pressures.