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Informist, Friday, Jun. 13, 2025

--Brent crude oil futures surge after Israel strikes Iran 

--Brent crude oil Aug futures surge 13% to $78.26 per barrel

NEW DELHI – Crude oil futures surged to an over four-month high on Friday due to fears of supply disruptions after Israel launched "preemptive strikes" on Iran's nuclear facilities. Israel Prime Minister Benjamin Netanyahu said the attack could last "as many days as it takes" to remove the threat of Iran's nuclear programme.

At 0841 IST, Brent crude futures were up 10.4% at $76.42 a barrel, after hitting a high of $78.5, while West Texas Intermediate crude was up 9.5% at $74.5 a barrel after hitting a high of $77.6. The prices of both hit their highest since late January.

The strikes by Israel on Iran led to a surge in the geopolitical premium on crude oil. In a scenario of further escalation, it isn't too difficult to envisage disruption in Iranian oil supplies, Dow Jones quoted ING's head of commodities strategy Warren Patterson as saying in a note. Iran is a meaningful oil producer, pumping 3.3 million barrels per day of crude oil and exporting about 1.7 million barrels per day, Patterson said.

Tensions between Israel and Iran had been building after US negotiations over Iran's nuclear programme broke down recently. On Thursday, US President Donald Trump said Israel "could very well" strike Iran as tensions mounted over US negotiations with Iran to halt its production of material for an atomic bomb, according to Reuters. "We remain committed to a Diplomatic Resolution to the Iran Nuclear Issue...They could be a Great Country, but they first must completely give up hopes of obtaining a Nuclear Weapon," Trump wrote on Truth Social.

Iran has plans for a new uranium enrichment site and said it would not abandon its plan because of mounting friction in the region. "We don't want tensions and prefer diplomacy to resolve the (nuclear) issue, but our armed forces are fully ready to respond to any military strike," Reuters quoted an Iranian official as saying on Thursday.

Earlier, it was reported that the sixth round of US-Iran nuclear talks would be held in Oman on Sunday. Reuters had reported that the US was preparing an evacuation of its Iraqi embassy and would allow military dependents to leave locations around West Asia due to heightened security risks in the region. Reports of the potential evacuation of US personnel had pushed up oil prices on Wednesday.

Previously, optimism about an Iran nuclear deal and prospects of sanctions on the country's oil exports being eased had led to a drop in oil prices. Now, however, the market doesn't see much chance of the US lifting restrictions on Iranian oil anytime soon. Instead, they fear additional disruption to supply from the region.

"The market pretty much believes that if the Iran nuclear talks fail, we will see an attack on Iran's nuclear facilities," Dow Jones quoted Phil Flynn of the Price Futures Group, as saying in a note. The economic backdrop is also bullish for oil, he said, noting softer than expected US inflation, a decline in US crude stocks, and slightly higher overall product demand in the past month. 

Israel said its attacks on Friday had targeted Iran's nuclear infrastructure. "We struck at the heart of Iran's nuclear enrichment programme. We struck at the heart of Iran's nuclear weaponisation programme," Israel Prime Minister Benjamin Netanyahu said in a recorded message. "We targeted Iran's main enrichment facility in Natanz. We targeted Iran's leading nuclear scientists working on the Iranian bomb. We also struck at the heart of Iran's ballistic missile programme." 

The market has to wait and watch how long the geopolitical premium will drive oil prices higher amid demand concerns. Earlier this week, the US Energy Information Administration said oil prices were likely to decline by the end of this year. "We forecast that the Brent price will fall to an average of $61/bbl by the end of this year and average $59/bbl in 2026," EIA said in its short-term outlook, released Tuesday. A slowdown in oil demand growth and output increases expected to exceed consumption may lead to a build-up in inventories and weigh on oil prices, it added.  End

US$1 = INR 86.06

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Afra Abbubacker

Edited by Avishek Dutta

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