Crude oil analysts are scrambling to adjust their forecasts after Israeli strikes on Iranian military facilities reignited tensions in the Middle East. The escalation has pushed geopolitics back to the forefront of oil market concerns.
Analysts warn that prices could spike above $80 per barrel if Iran responds aggressively or disrupts traffic in the Strait of Hormuz—a critical artery for global oil shipments.
Iran has already retaliated with a barrage of drone strikes, fueling fears of broader conflict and increased volatility in energy markets.
Analysts Warn of Potential Price Surge
Charu Chanana, chief investment strategist at Saxo Markets, said oil could climb toward $80 if tensions escalate further and supply risks materialize. However, she noted that rising output from OPEC+ might limit the price rally by raising oversupply fears in the months ahead.
“A worst-case scenario like a closure of the Strait of Hormuz or disruption to Iran’s 2.1 million barrels per day in exports could seriously impact global oil supply and inflation,” Chanana told Bloomberg.
Iran Responds with Drone Barrage
Iran vowed a “harsh response” to Israel’s airstrikes, and reports indicate it has launched more than 100 drones at Israeli targets. Reuters quoted Israeli military sources who said the attack followed strikes on Iran’s missile factories, uranium enrichment sites, and senior military commanders.
Iran’s Revolutionary Guard confirmed that an Israeli missile hit its headquarters. It also reported the death of top commander Hossein Salami during the assault.
Geopolitical Risk Rattles Markets
Mukesh Sahdev, head of oil research at Rystad Energy, said Iran’s actions could include a blockade of the Strait of Hormuz. “Any move to block the strait would disrupt oil supplies and trigger a global price shock,” he said. Still, he believes diplomacy could prevent a full-scale war. “The U.S. wants negotiations, not conflict,” Sahdev added.
Other analysts share that cautious outlook. Robert Rennie, Westpac’s head of commodity research, said Israel appeared to focus on disabling Iran’s military assets rather than provoking a prolonged war. “The strikes look pre-emptive, not the start of something larger,” Rennie said. “But weekend risks are high, and crude might break past its January peak.”
U.S. Signals It Will Not Join the Fight
Washington has distanced itself from the Israeli operation. Secretary of State Marco Rubio stated that the U.S. was not involved in the attacks. “Our priority is protecting American forces in the region,” Rubio said. “Israel acted on what it considered a necessary act of self-defense.”
Although the U.S. maintains strong ties with Israel, it appears focused on avoiding further escalation. President Trump, however, recently criticized ongoing talks with Iran, expressing frustration with the slow pace of progress.
As the situation develops, markets remain jittery. Iran’s next move will likely determine whether the crisis deepens or calms in the coming days.