Global oil prices soared on Friday following a dramatic escalation in the Middle East, with Israel launching strikes on Iran’s nuclear and military targets.
Brent crude, the international oil benchmark, jumped more than 10% at one point, hitting its highest level since January before settling 7% higher at $74.23 a barrel. The surge came amid fears that growing conflict could disrupt supplies from one of the world’s most energy-rich regions.
“It’s an explosive situation, albeit one that could be defused quickly,” said Vandana Hari of Vanda Insights. “It could also spiral out into a bigger war that disrupts Mideast oil supply.”
Though oil prices remain more than 10% lower than this time last year, the potential for further escalation has alarmed traders and economists alike.
Market Fallout
The ripple effects were felt across global stock markets. Japan’s Nikkei dropped 0.9%, the FTSE 100 fell 0.39%, and Wall Street closed lower — with the Dow Jones down 1.79% and the S&P 500 losing 0.69%.
As tensions rose, investors flocked to traditional safe-haven assets. Gold surged 1.2% to $3,423.30 an ounce — its highest level in nearly two months — while the Swiss franc also saw gains.
Strait of Hormuz in Focus
The conflict has refocused attention on the Strait of Hormuz — a vital shipping route bordered by Iran, Oman, and the UAE, through which about 20% of the world’s oil flows.
“In an extreme scenario, Iran could disrupt supplies of millions of barrels of oil a day,” the article noted, raising concerns over global energy security.
What Comes Next
Capital Economics analysts warned that a direct hit on Iran’s oil infrastructure could push Brent crude up to $100 a barrel. “But such a spike would likely trigger increased production from other countries, eventually cooling prices,” they said.
For consumers, the immediate impact remains uncertain. “There are two key factors at play: whether higher wholesale fuel prices are sustained and, crucially, the sort of margin retailers decide to take,” said Rod Dennis of the RAC.
Energy analysts caution that the next few days will be critical. “What we see now is a very initial risk-on reaction,” said Saul Kavonic of MST Financial. “But the market will need to factor in where this could escalate to.”
