Oil prices surged on Monday as markets reacted to rising fears of supply disruptions following coordinated military strikes by the United States and Israel against Iran.
By 03:35 ET (08:35 GMT), Brent crude futures had jumped 9.6% to $79.78 per barrel after earlier reaching their highest level since January 2025. West Texas Intermediate (WTI) crude futures climbed 8.8% to $72.95 per barrel, remaining just below their strongest level since June.
Military escalation raises supply concerns
Over the weekend, U.S. and Israeli forces carried out extensive strikes across Iran, reportedly killing hundreds of people, including Supreme Leader Ayatollah Khamenei and several senior government officials.
Iran responded with missile attacks targeting Israel as well as multiple Middle Eastern countries aligned with the United States, including Bahrain, Kuwait, Qatar and the United Arab Emirates.
Reports also indicated Iranian attacks on vessels moving through the Strait of Hormuz, heightening concerns about near-term disruptions to global oil shipments.
“With the retaliatory action now evolving to attacks on oil tankers in the Strait of Hormuz, the threat on oil supplies has substantially risen,” ANZ analysts said in a note.
The Strait of Hormuz is one of the most strategically important energy corridors worldwide, accounting for roughly 20% of global oil consumption flows.
U.S. President Donald Trump said late Sunday that military operations against Iran would continue in the coming days and cautioned that additional American casualties were likely.
The latest escalation marks the second major U.S. military action against Iran since mid-2025, with Tehran’s nuclear enrichment programme remaining a central source of geopolitical tension. The strikes followed failed negotiations between Washington and Tehran that ended without a breakthrough.
In June 2025, the United States had previously targeted Iran’s key nuclear facilities in an effort to curb its nuclear ambitions.
Analysts believe oil prices could stay elevated in the near term as markets assess the evolving geopolitical risks.
“We expect a potential price spike of up to $80/bbl over the next week due to the initial and continued U.S. and Israeli combat operations against Iran,” analysts at Texas Capital, led by Derrick Whitfield said in a note on Sunday.
OPEC+ agrees to boost output
Separately, the Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, agreed at a Sunday meeting to increase production by 206,000 barrels per day.
The additional output could help offset some of the supply risks linked to the conflict, although uncertainty remains over whether member countries will fully implement the planned increases.
Shipping disruptions related to the conflict could also reduce the overall impact of the supply boost.
The move represents OPEC’s first production increase since late 2025, as the group seeks to expand output and reclaim market share.
OPEC had already lifted production by roughly 2.5 million barrels per day during 2025 before announcing a temporary pause in output increases in November.
Oil prices later pulled back slightly from earlier highs, as the announced production increase helped ease concerns about severe supply shortages.
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