Escalation in the Middle East and the Surge in Oil Prices

On June 13, 2025, Israeli Air Force jets struck Iran’s nuclear facilities and ballistic-missile factories, including sites in Natanz and Tabriz. In the wake of Tehran’s retaliatory threats, Brent crude jumped to $78.50 barrel, while WTI climbed to $77,62 per barrel in a single trading session (Reuters).

Background of the Conflict

• Breakdown of nuclear talks. After the fifth round of negotiations in Vienna collapsed, Tehran abandoned its uranium-enrichment limits. A sixth round, due to convene in Oman, stalled over key safeguards at Iran’s nuclear sites.

• Doctrine of military coercion. Israel repeatedly warned that diplomacy had reached its limit and vowed to strike Iran’s strategic assets if it pressed ahead with its nuclear programme. Supreme Leader Ayatollah Ali Khamenei pledged “harsh punishment” for any violation of Iranian sovereignty, declaring, “We will not remain in debt.”

Timeline of the Recent Escalation

• Morning of June 13. Israeli intelligence detected unusual activity at an IRGC rocket facility in Tabriz.

• 11:00 GMT. The Israeli Air Force conducted a series of raids on facilities in Tabriz and Natanz, as well as missile-component depots (The Economic Times).

• Immediate Iranian response. The IRGC launched over 100 attack drones toward Israel and threatened missile strikes on U.S. bases in the region.

• Notification to Washington. According to Iranian state media, Israel informed the United States in advance, although Washington did not partake in planning or execution of the strikes.

Immediate Market Reaction

• Brent. Futures for Brent crude rose by $4.60, or 6.63%, to $73.96 per barrel after touching an intraday high of $78.50—their highest in five months (Reuters).

• WTI. West Texas Intermediate climbed by $4.99, or 7.33%, to $73.03 per barrel following an intraday peak of $77.62—the strongest level since January 21.

• Volume and volatility. LSEG Refinitiv data show first-hour Brent volumes exceeded the monthly average by 25% (Japan Times).

Why Oil Is Rallying: Key Drivers

1. Risk of disruption in the Strait of Hormuz. Up to 20% of seaborne oil exports traverse this chokepoint. Threats of its closure force traders to price in a geopolitical risk premium.

2. Insurance premiums. Immediately after the strikes, Lloyd’s of London raised insurance rates for vessels in the Persian Gulf by 35%, citing the threat of drone attacks and sea mines (ABC).

3. Speculative inflows. Both spot and futures markets have welcomed “bulls”: open interest in Brent contracts rose by 18% since the week began (Reuters).

Expert Views as of June 13

1. Short-term trend—testing $78–80.

“Crude oil has since broken above its June 2022 bearish trendline, with a move to the highs around $78 or even $80 now within easy reach. The question is whether this is a typical geopolitical knee-jerk reaction,” warn Reuters analysts (Reuters).

2. Surge to $100–120 if tensions escalate further.

J.P. Morgan cautions that “should the situation further intensify, Brent could surge to $120 per barrel,” underlining price sensitivity to regional supply-risk premiums (The Economic Times).

3. De-escalation will drag prices back to $70–75.

Strategists predict that genuine easing of tensions—such as progress in the U.S.–Iran talks in Oman—would quickly deflate the risk premium and see prices retreat to the $70–75 range, as happened after previous diplomatic efforts (Bloomberg).

A single tactical decision—Israel’s airstrikes on Iranian sites and Tehran’s immediate retaliatory threats—sent shockwaves through global oil markets, triggering a pronounced price spike. Looking ahead, the conflict’s trajectory, OPEC+ policy responses, and the balance between geopolitical risk and underlying demand will determine whether this surge is merely a fleeting “fear premium” or the start of a sustained upward trend.