Oil prices rise more than 4% as conflict between Iran and Israel escalates
author: Ann
2025-06-19
Brent and WTI benchmarks resume gains
War risks continue to support market
IEA raises global oil supply forecast
HOUSTON, June 17
(Reuters) - Oil prices rose more than 4% on Tuesday as the conflict between Iran and Israel dragged on with no end in sight, though key oil and gas infrastructure and delivery have so far not been significantly affected.
Brent crude futures closed at $76.45 a barrel, up $3.22, or 4.4%. U.S. West Texas Intermediate crude futures closed at $74.84 a barrel, up $3.07, or 4.28%.
While there were no significant disruptions to oil deliveries, Iran partially suspended gas production at the South Pars field it shares with Qatar due to a fire sparked by an Israeli attack on Saturday. Israel also attacked Iran's Shahran oil terminal.
Phil Flynn, senior analyst at Price Futures Group, said ongoing airstrikes by Israel and Iran have renewed geopolitical risk in an already tight oil market.
"This is not a one-off thing; it's probably more similar to what's happening with Russia and Ukraine," Flynn said.
The collision of two oil tankers near the Strait of Hormuz highlights the possibility that the vital oil shipping waterway could be cut off. Electronic jamming in the Strait of Hormuz has intensified during the conflict.
"The market is primarily concerned about disruptions in the Strait of Hormuz, but the risk of that is very low," said Saxo Bank analyst Ole Hansen.
Hansen added that the United States has no intention of closing the waterway given the revenue Iran would lose and its desire for lower oil prices and inflation.
John Kilduff, partner at Again Capital, said the uncertainty led market participants to wonder on Tuesday how Iran's leadership would react if they felt they were losing their grip on power.
"We're talking about a safety premium of more than $10 a barrel that's already built into the price of oil," Kilduff said.
Despite the potential for supply disruptions, there are signs that oil supplies remain ample amid expectations of lower demand.
In its monthly oil report released on Tuesday, the International Energy Agency cut its global oil demand forecast by 20,000 barrels per day from last month and raised its supply forecast by 200,000 barrels per day to 1.8 million barrels per day.
Investors are also watching central bank rate decisions, with the U.S. Federal Open Market Committee set to discuss rates later on Tuesday, PVM Associates analyst Tamas Varga said in a note.
War risks continue to support market
IEA raises global oil supply forecast
HOUSTON, June 17
(Reuters) - Oil prices rose more than 4% on Tuesday as the conflict between Iran and Israel dragged on with no end in sight, though key oil and gas infrastructure and delivery have so far not been significantly affected.
Brent crude futures closed at $76.45 a barrel, up $3.22, or 4.4%. U.S. West Texas Intermediate crude futures closed at $74.84 a barrel, up $3.07, or 4.28%.
While there were no significant disruptions to oil deliveries, Iran partially suspended gas production at the South Pars field it shares with Qatar due to a fire sparked by an Israeli attack on Saturday. Israel also attacked Iran's Shahran oil terminal.
Phil Flynn, senior analyst at Price Futures Group, said ongoing airstrikes by Israel and Iran have renewed geopolitical risk in an already tight oil market.
"This is not a one-off thing; it's probably more similar to what's happening with Russia and Ukraine," Flynn said.
The collision of two oil tankers near the Strait of Hormuz highlights the possibility that the vital oil shipping waterway could be cut off. Electronic jamming in the Strait of Hormuz has intensified during the conflict.
"The market is primarily concerned about disruptions in the Strait of Hormuz, but the risk of that is very low," said Saxo Bank analyst Ole Hansen.
Hansen added that the United States has no intention of closing the waterway given the revenue Iran would lose and its desire for lower oil prices and inflation.
John Kilduff, partner at Again Capital, said the uncertainty led market participants to wonder on Tuesday how Iran's leadership would react if they felt they were losing their grip on power.
"We're talking about a safety premium of more than $10 a barrel that's already built into the price of oil," Kilduff said.
Despite the potential for supply disruptions, there are signs that oil supplies remain ample amid expectations of lower demand.
In its monthly oil report released on Tuesday, the International Energy Agency cut its global oil demand forecast by 20,000 barrels per day from last month and raised its supply forecast by 200,000 barrels per day to 1.8 million barrels per day.
Investors are also watching central bank rate decisions, with the U.S. Federal Open Market Committee set to discuss rates later on Tuesday, PVM Associates analyst Tamas Varga said in a note.
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