In a dramatic new development on the international stage, global oil prices surged sharply on Friday after Israel announced a military strike on Iranian targets, including nuclear facilities, missile production centers, and military headquarters. This military escalation has sparked widespread concern among investors about the potential disruption of oil supplies from the Middle East, one of the world’s richest energy regions.
The price of Brent crude jumped by more than 13% during the day, reaching $78.50 per barrel before settling at $74.23, marking the largest single-day gain since 2022. Similarly, U.S. West Texas Intermediate crude rose by 14% during trading, closing at $72.98 per barrel. This sudden surge reflects global fears of a potential war that could affect oil flows, particularly given Iran’s reliance on the strategic Strait of Hormuz, through which nearly 20% of global oil supplies pass.
Global financial markets were negatively impacted. Stock indices in Asia, Europe, and the United States saw significant declines. The U.S. Dow Jones Industrial Average lost around 770 points (1.79%), while the Nasdaq index dropped by more than 1.3%. At the same time, investors turned to safe-haven assets such as gold and the Swiss franc. Gold prices climbed to over $3,430 per ounce, reaching a two-month high an indication of growing anxiety about an uncertain future.
Economic analysts have warned that any direct strike on Iran’s oil export infrastructure particularly Kharg Island, which handles 90% of the country’s oil exports could push Brent prices to between $80 and $100 per barrel. However, some suggest that such a sharp increase might encourage other OPEC countries to ramp up production, potentially limiting the duration and intensity of the price surge.
In this context, a spokesperson for the UK’s Royal Automobile Club (RAC) stated that it is "too early" to determine the impact of the oil price spike on consumer fuel prices, noting that much depends on whether wholesale prices remain elevated and how fuel retailers respond.
The global outlook remains tense, with markets on high alert. As investors seek to safeguard their assets, the world watches closely for any developments that could disrupt the flow of energy from the Middle East evoking memories of past crises that saw oil prices skyrocket, such as after Russia’s invasion of Ukraine.
