Oil prices surged more than 7 pc on Friday, driven by escalating tensions between Israel and Iran that fuelled fears of broader disruptions to crude supply from the Middle East.
Brent crude futures rose by $4.87, or 7.02 pc, to settle at $74.23 a barrel, having earlier surged more than 13 pc to touch an intraday high of $78.50 — the strongest level since 27 January. Over the week, Brent rallied by 12.5 pc, reflecting heightened geopolitical risk.
Meanwhile, U.S. West Texas Intermediate (WTI) crude futures climbed $4.94, or 7.26 pc, to end the session at $72.98 a barrel. WTI had briefly jumped more than 14 pc to reach $77.62 during the day, its highest since 21 January. On a weekly basis, WTI was up by 13 pc.
Both Brent and WTI posted their largest intraday gains since 2022, when Russia’s invasion of Ukraine sent shockwaves through global energy markets and led to a spike in oil prices.
The latest price rally followed reports that Israel had launched strikes on Iranian nuclear sites, ballistic missile factories, and military leaders. Israel described the attacks as the beginning of a sustained campaign aimed at preventing Iran from developing nuclear weapons.
Shortly after global markets closed, Iranian missiles struck multiple buildings in Tel Aviv, with explosions also reported in southern Israel. These retaliatory attacks marked a dramatic escalation in the conflict, which has raised the spectre of broader regional instability.
Despite the attacks, Iran’s National Iranian Oil Refining and Distribution Company said the country’s oil refining and storage infrastructure remained intact and fully operational, according to Reuters.
Iran, a key member of the Organisation of the Petroleum Exporting Countries (OPEC), currently produces around 3.3 million barrels of crude oil per day and exports over 2 million barrels per day of crude and fuel. Any threat to its production or exports has the potential to disrupt global supply and send prices higher.
Industry analysts and OPEC observers estimate that the bloc, along with allied producers such as Russia, has spare production capacity approximately equal to Iran’s output. This buffer could be used to offset any sudden shortfalls, though logistical and political challenges remain.
Concerns are also mounting over the security of the Strait of Hormuz, a vital maritime passage for global oil shipments. Any threat to this chokepoint could have far-reaching consequences for international energy markets, as roughly one-fifth of the world's oil passes through the strait.
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