U.S. Strikes on Iran's Nuclear Sites Spark 5.7% Oil Surge

The recent military strikes by the United States on three nuclear facilities in Iran—Fordow, Natanz, and Isfahan—have sent shockwaves through the global energy market. The benchmark Brent crude oil price surged by 5.7% to $81.40 per barrel, extending a nearly three-week upward trend. The price differential widened further, although Brent oil futures later retreated to $77.27 per barrel.

The strikes, described as a "devastating blow" by the U.S. President, have escalated tensions in the Middle East. The subsequent threats from both Washington and Tehran have added fuel to an already volatile situation. The market's response underscores the rapid increase in geopolitical risk premiums. Since the attack on Iran a week ago, global oil futures prices have been on the rise, with options trading volumes and freight costs also surging. The futures curve has experienced significant volatility due to expectations of short-term supply tightness.

The Middle East, which accounts for one-third of global oil production, is a critical region for oil supply. Any disruption in this area directly impacts inflationary pressures. Analysts warn that if Iran follows through on its threats of retaliation, oil prices could potentially exceed $100 per barrel.

The current oil transportation system is facing multiple risks. The Strait of Hormuz, through which one-fifth of the world's oil passes, is a crucial point in the escalating tensions. While the Iranian parliament has proposed blocking this strategic waterway, the final decision rests with the Supreme Leader.

Iran's potential retaliatory actions include precision strikes on the energy infrastructure of key OPEC+ oil-producing countries. This has raised concerns in the region. Iran could also orchestrate attacks on ships in the Red Sea by the Houthi rebels, who have already issued threats following the U.S. strikes. Additionally, Iran might put its own crucial oil export hub at risk, although satellite monitoring indicates that Iran is accelerating its oil exports.

This crisis has brought the Organization of the Petroleum Exporting Countries (OPEC) and its allies into the spotlight. The organization has been gradually lifting production caps to gain market share, but member countries still hold significant idle production capacity. The market is closely watching whether OPEC+ will activate emergency reserves to fill any supply gaps if the conflict escalates. In this complex geopolitical chess game, the price of each barrel of oil is a critical factor affecting the global economy.