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Oil prices jumped over 2% on Tuesday as escalating Iran-Israel conflict stoked fears of supply disruption in the Middle East. Brent crude rose $1.17, or 1.6%, to $74.40 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed $1.34, or 1.87%, to $73.11 by 0005 GMT. Both benchmarks had earlier surged more than 2% in intraday trading.
The spike followed a sharp reversal from Monday’s losses, when oil dropped over 1% on hopes of de-escalation after reports that Iran was seeking peace. However, tensions soared again as explosions and air defense activity were reported in Tehran, and Israeli air raid sirens sounded in Tel Aviv amid Iranian missile attacks.
Former U.S. President Donald Trump called for "everyone" to evacuate Tehran, further fueling market anxiety. Trump also criticized Iran for not signing a nuclear agreement sooner and suggested the country now seeks to reach a deal. Analysts believe any future deal that lifts U.S. sanctions could lead to increased Iranian oil exports, which might put downward pressure on prices.
Iran, OPEC’s third-largest oil producer, plays a critical role in global supply. Ongoing hostilities pose a serious threat to output, adding risk premiums to crude prices.
Meanwhile, OPEC and allies including Russia, collectively known as OPEC+, stated they expect the global economy to remain resilient in the latter half of 2025. However, they slightly reduced their forecast for oil production growth from non-OPEC+ countries through 2026.
With geopolitical risks rising and market volatility high, oil traders are closely monitoring developments in the Middle East, especially concerning Iran’s export capacity and potential diplomatic breakthroughs.
