Oil prices climbed on Wednesday as reports emerged of possible Israeli military action against Iranian nuclear facilities, adding a new layer of geopolitical risk to a market already grappling with ongoing Middle East tensions. The price increase reflects immediate concerns about potential supply disruptions in a region responsible for approximately one-third of global crude production.
Fears of Israeli Strike on Iran Tick Oil Prices Upwards
Oil markets reacted swiftly to reports that Israel may be preparing for strikes against Iranian nuclear facilities, based on new US intelligence cited by CNN.
Brent crude, the international benchmark, rose above $66 a barrel while West Texas Intermediate (WTI) crude surged as much as 3.5% before stabilizing around $62.94, representing a gain of $0.91 or 1.47%.
According to the report, which has not been officially confirmed, it remains unclear whether Israeli leaders have made a final decision on whether to carry out the strikes, but the mere possibility has been enough to inject fresh volatility into energy markets.
This development comes at a particularly sensitive moment in Iran-US nuclear talks, which have already experienced significant ups and downs over recent weeks. Any military action by Israel against Iran would almost certainly derail these negotiations and potentially trigger a broader regional conflict in the Middle East, which supplies about a third of the world’s crude oil.
A broader regional conflict could potentially threaten key shipping routes, particularly the Strait of Hormuz, through which approximately 20% of the global oil supply passes daily. Even temporary disruptions to this critical chokepoint could have outsized effects on global energy markets.
Market analysts note that the geopolitical concerns have temporarily overshadowed what had been increasingly bearish fundamentals for oil, including expectations of looser supply-demand balances in the second half of 2025.
The potential for military action comes as Iran’s Supreme Leader, Ali Khamenei, recently expressed pessimism about the latest round of nuclear negotiations with the United States, saying he didn’t believe they would lead to a result and referring to it as “nonsense“. This has further complicated the diplomatic picture and potentially increased the likelihood of Israel taking unilateral action if it perceives an imminent threat from Iran’s nuclear program.
Oil Price Brief
West Texas Intermediate (WTI) crude oil futures for July 2025 delivery were trading at $62.94 per barrel as of Wednesday morning, representing an increase of $0.91 or 1.47% from the previous settlement price of $62.03. The contract opened at $62.27 and reached an intraday high of $64.19 before pulling back slightly, demonstrating significant volatility following reports of potential Israeli strikes on Iranian nuclear facilities.
Trading volume has been moderate at 65,750 contracts, representing approximately 28% of the 65-day average volume of 236,530 contracts. The futures curve shows backwardation (where near-term prices are higher than longer-dated contracts), with August 2025 futures trading at $62.29, September at $61.71, and December 2025 at $60.92, indicating market participants expect supplies to improve over time.
WTI prices have struggled in 2025, with performance metrics showing declines across multiple timeframes: down 12.44% year-to-date, 12.82% over the past three months, and 18.54% over the past year. The contract is currently trading well off its 52-week high of $84.52, though it has recovered from the 52-week low of $55.12.
Prior to today’s geopolitical developments, crude oil had been under pressure from several bearish factors, including OPEC+ increasing production, concerns about Chinese economic growth, and rising US shale output.
Brent crude is trading at $66.26 per barrel, up 1.35%, maintaining a premium of approximately $3.30 over WTI. Natural gas is the only energy commodity showing weakness today, down 0.50% to $3.748 per million British thermal units.
Refined products are following crude higher, with RBOB gasoline up 0.94% to $2.1724 per gallon and heating oil rising 0.95% to $2.1139 per gallon. The energy market’s reaction appears measured relative to the potential impact of an actual military confrontation between Israel and Iran, suggesting that traders are still assessing the probability of such an event occurring rather than pricing in a certainty of supply disruptions.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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