Tensions rise as Israel considers strike on Iran, oil prices surge
Oil prices on the New York commodity exchange are rising sharply, reacting to reports that Israel may strike Iranian nuclear facilities, brokers report.
A barrel of West Texas Intermediate crude for July delivery is priced at $63.10 on the NYMEX in New York, up 1.73%. Earlier, the commodity gained 3.5%.
Brent on ICE for July is priced at $66.42 a barrel, after an increase of 1.59%.
According to U.S. intelligence information, Israel is preparing to attack Iran's nuclear facilities. Such an attack by the Israeli government would be a "brazen break" from President Donald Trump's policy, assessed American officials cited by CNN. They added that the strike could contribute to a broader conflict in the Middle East, which U.S. diplomacy consistently wants to avoid.
Currently, it is unclear whether Israeli leaders have made a decision to strike. U.S. President Donald Trump is trying to negotiate a nuclear agreement with Iran that would limit the country's nuclear program in exchange for lifting some sanctions.
The U.S. emphasizes that the main goal of the agreement is to prevent Iran from building a nuclear weapon.
However, headlines about U.S.-Iran nuclear talks are currently "mixed," and it is unknown when the parties could potentially reach an agreement that would pave the way for increased Iranian oil supplies to markets. This could likely lead to an oil surplus in global markets by the second half of 2025.
For the time being, a potential Israeli attack on Iranian nuclear facilities could hinder progress in U.S.-Iran talks and increase tension in the Middle East, from where about one-third of the world's oil supplies originate.
The market awaits a U.S.-Iran agreement
Israel has long considered an attack on Iran's nuclear program. However, a serious question remains about how many of Iran's nuclear power plants are secured against potentially extreme attacks.
Crude oil could maintain a risk premium as long as the current discussions on Iran's nuclear program appear ineffective, evaluates Robert Rennie, head of research on commodities and CO2 emissions at Westpac Banking Corp.
Analysts assess that if a U.S.-Iran nuclear agreement were reached, the price of oil could fall to $40 a barrel, especially as OPEC+ also plans to supply more oil to markets.
