Oil Prices Extend Rally as Geopolitical Tensions Grip Energy Markets
Oil markets continued their upward momentum on Monday as renewed military strikes between Israel and Iran over the weekend deepened concerns that a widening regional war could threaten crucial oil exports from the Middle East.
Brent crude climbed $1.12, or 1.5%, to $75.35 per barrel by 0019 GMT, while West Texas Intermediate (WTI) futures added $1.10, or 1.5%, to $74.08. Earlier in the session, both benchmarks jumped by over $4, building on Friday’s dramatic surge.
On Friday, both Brent and WTI settled more than 7% higher, having risen as much as 13% intraday, reaching their highest levels since January.
Strait of Hormuz in Focus: A Global Chokepoint for Oil
The market’s primary concern is the potential for disruptions to the Strait of Hormuz, a narrow but vital shipping lane through which roughly 20% of global oil consumption — about 18 to 19 million barrels per day (bpd) — transits daily.
“Buying was driven by the ongoing Israel-Iran conflict, with no resolution in sight,” said Toshitaka Tazawa, analyst at Fujitomi Securities.
“But as seen last Friday, some selling emerged on concerns of overreaction.”
Key Figures Driving Oil Volatility
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Brent Crude (as of 0019 GMT): $75.35 (+1.5%)
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WTI Crude: $74.08 (+1.5%)
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Friday Session Surge: +13% intraday; +7% closing gains
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Iran’s Output: ~3.3 million bpd
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Iran’s Exports: Over 2 million bpd
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OPEC+ Spare Capacity: Roughly equivalent to Iran’s production
Iran, a core OPEC member, exports over 2 million barrels daily, and any interruption to its oil flow—either from Israeli airstrikes on facilities or from a retaliatory closure of the Strait—could send shockwaves through energy markets.
Diplomatic Efforts Falter Amid Escalation
Attempts to de-escalate the conflict have so far yielded little progress. On Sunday, Iran launched retaliatory strikes, killing civilians and raising the specter of further regional destabilization.
U.S. President Donald Trump stated he hopes the two nations can reach a ceasefire, but signaled support for Israel and stopped short of pressing for de-escalation.
“Sometimes countries have to fight it out first,” Trump remarked.
Meanwhile, German Chancellor Friedrich Merz said the G7 summit in Canada would prioritize diplomatic efforts to contain the conflict. However, sources told Reuters that Iran has rejected ceasefire talks during ongoing attacks, communicating its position to mediators Qatar and Oman.
Market Outlook: Will Oil Prices Breach $80?
Oil analysts are split on how high prices could go in the near term. While the current OPEC+ spare capacity could theoretically offset Iranian output, any physical disruption in the Strait of Hormuz would be far harder to manage.
With Israeli strikes reportedly targeting energy infrastructure and Iran signaling defiance, the risk premium on crude remains elevated.
“Heightened fears over a Strait of Hormuz blockade could sharply lift prices,” Tazawa added.
If the conflict spills over into Gulf Arab states or disrupts shipping routes, oil prices could easily spike beyond $80 per barrel. Conversely, if diplomatic channels reopen, the risk premium may unwind partially — but with no clear resolution in sight, markets are bracing for heightened volatility.
Conclusion: Energy Markets at a Crossroads
Crude oil markets are once again being dominated by geopolitical risk, with the Israel-Iran conflict reminding investors how fragile the Middle East energy ecosystem can be. As headlines continue to evolve and diplomatic efforts struggle, traders and policymakers alike are closely watching military developments and shipping activity near the Strait of Hormuz.
Whether oil will stabilize or spike further depends on two key variables: the intensity of the conflict and the international response — both diplomatic and military.