Publication date:
June 22, 2025
Oil Prices Expected to Spike 10% Following U.S. Attack on Iran
Oil prices could jump 10% after U.S. attacks on Iran, potentially sending Brent crude to nearly $85 per barrel, though the spike may be short-lived.
Energy
The U.S. attack on Iran has escalated the conflict in the Middle East and is expected to cause a sharp rise in oil prices when markets open. Energy analytics firm Kpler forecasts oil prices could gap up 7-10% initially as risk premiums surge. Based on Friday's closing price, this could send Brent crude to nearly $85 per barrel.
However, analysts caution that any price spike may be short-lived. Iran's ability to retaliate is constrained, with a shutdown of the critical Strait of Hormuz or attacks on Gulf energy infrastructure seen as unlikely. The geopolitical shock is also expected to prompt increased crude supplies to reach the market, helping to ease price pressures.
Kpler predicts OPEC+ may boost output by over 400,000 barrels per day for August, adding to recent production increases. While closure of the Strait of Hormuz remains a concern, as 21% of global petroleum consumption flows through the waterway, such a move would severely damage Iran's own economy.
Analysts at Deutsche Bank estimate that in a worst-case scenario of disrupted Iranian oil supplies and closure of the strait, oil could potentially reach over $120 per barrel. However, this is seen as unlikely given the economic consequences for Iran.
The immediate focus will be on potential freight disruptions in the Middle East Gulf and Red Sea regions from increased threats. Middle distillates, particularly jet fuel, may see price benefits in Western markets as a result of the heightened geopolitical tensions.
However, analysts caution that any price spike may be short-lived. Iran's ability to retaliate is constrained, with a shutdown of the critical Strait of Hormuz or attacks on Gulf energy infrastructure seen as unlikely. The geopolitical shock is also expected to prompt increased crude supplies to reach the market, helping to ease price pressures.
Kpler predicts OPEC+ may boost output by over 400,000 barrels per day for August, adding to recent production increases. While closure of the Strait of Hormuz remains a concern, as 21% of global petroleum consumption flows through the waterway, such a move would severely damage Iran's own economy.
Analysts at Deutsche Bank estimate that in a worst-case scenario of disrupted Iranian oil supplies and closure of the strait, oil could potentially reach over $120 per barrel. However, this is seen as unlikely given the economic consequences for Iran.
The immediate focus will be on potential freight disruptions in the Middle East Gulf and Red Sea regions from increased threats. Middle distillates, particularly jet fuel, may see price benefits in Western markets as a result of the heightened geopolitical tensions.
