Oil hits five-month high after U.S. attacks key Iranian nuclear sites
Market participants expect further price gains amid mounting fears that an Iranian retaliation may include a closure of the Strait of Hormuz, through which roughly a fifth of global crude supply flows
Oil prices jumped on Monday (June 23, 2025) to their highest since January as the United States' weekend move to join Israel in attacking Iran's nuclear facilities stoked supply worries.
Brent crude futures was up $1.92 or 2.49% at $78.93 a barrel as of 0117 GMT. U.S. West Texas Intermediate crude advanced $1.89 or 2.56% to $75.73.
Both contracts jumped by more than 3% earlier in the session to $81.40 and $78.40, respectively, touching five-month highs before giving up some gains.
The rise in prices came after U.S. President Donald Trump said he had "obliterated" Iran's main nuclear sites in strikes over the weekend, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself.
Iran is OPEC's third-largest crude producer.
Market participants expect further price gains amid mounting fears that an Iranian retaliation may include a closure of the Strait of Hormuz, through which roughly a fifth of global crude supply flows.
Iran's Press TV reported that the Iranian parliament had approved a measure to close the strait. Iran has in the past threatened to close the strait but has never followed through on the move.
"The risks of damage to oil infrastructure ... have multiplied," said Sparta Commodities senior analyst June Goh.
Although there are alternative pipeline routes out of the region, there will still be crude volume that cannot be fully exported out if the Strait of Hormuz becomes inaccessible. Shippers will increasingly stay out of the region, she added.
Goldman Sachs said in a Sunday (June 22, 2025) report that Brent could briefly peak at $110 per barrel if oil flows through the critical waterway were halved for a month, and remain down by 10% for the following 11 months.
The bank still assumed no significant disruption to oil and natural gas supply, adding global incentives to try to prevent a sustained and very large disruption.
Brent has risen 13% since the conflict began on June 13, while WTI has gained around 10%.
The current geopolitical risk premium is unlikely to last without tangible supply disruption, analysts said.
Meanwhile, the unwinding of some long positions accumulated following a recent price rally could cap an upside to oil prices, Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a market commentary on Sunday.
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Hindustan Times
29 minutes ago
- Hindustan Times
Iran oil doomsday in Hormuz may be more fear than reality: Bousso
, not 55km , in paragraph 8) Iran oil doomsday in Hormuz may be more fear than reality: Bousso * US strikes on Iran spur fear of disruption to Middle East oil exports * Iran able to block the Strait of Hormuz, has tried in the past * Disruptions likely to be met by swift response from US Navy By Ron Bousso LONDON, - U.S. strikes on several Iranian nuclear sites represent a meaningful escalation of the Middle East conflict that could lead Tehran to disrupt vital exports of oil and gas from the region, sparking a surge in energy prices. But history tells us that any disruption would likely be short-lived. Investors and energy markets have been on high alert since Israel launched a wave of surprise airstrikes across Iran on June 13, fearing disruption to oil and gas flows out of the Middle East, particularly through the Strait of Hormuz, a chokepoint between Iran and Oman through which around 20% of global oil and gas demand flows. Benchmark Brent crude prices have risen by 10% to over $77 a barrel since June 13. While Israel and Iran have targeted elements of each other's energy infrastructure, there has been no significant disruption to maritime activity in the region so far. But President Donald Trump's decision to join Israel by bombing three of Iran's main nuclear sites in the early hours of Sunday could alter Tehran's calculus. Iran, left with few cards to play, could retaliate by hitting U.S. targets across the region and disrupting oil flows. While such a move would almost certainly lead to a sharp spike in global energy prices, history and current market dynamics suggest any move would likely be less damaging than investors may fear. CAN THEY DO IT? The first question to ask is whether Iran is actually capable of seriously disrupting or blocking the Strait of Hormuz. The answer is probably yes. Iran could attempt to lay mines across the Strait, which is 34 km wide at its narrowest point. The country's army or the paramilitary Islamic Revolutionary Guard Corps could also try to strike or seize vessels in the Gulf, a method they have used on several occasions in recent years. Moreover, while Hormuz has never been fully blocked, it has been disrupted several times. During the 1980s Iran-Iraq war, the two sides engaged in the so-called "Tanker Wars" in the Gulf. Iraq targeted Iranian ships, and Iran attacked commercial ships, including Saudi and Kuwaiti oil tankers and even U.S. navy ships. Following appeals from Kuwait, then-U.S. President Ronald Reagan deployed the navy between 1987 and 1988 to protect convoys of oil tankers in what was known as Operation Earnest Will. It concluded shortly after a U.S. navy ship shot down Air Iran flight 655, killing all of its 290 passengers on board. Tensions in the strait flared up again at the end of 2007 in a series of skirmishes between the Iranian and U.S. navies. This included one incident where Iranian speedboats approached U.S. warships, though no shots were fired. In April 2023, Iranian troops seized the Advantage Sweet crude tanker, which was chartered by Chevron, in the Gulf of Oman. The vessel was released more than a year later. Iranian disruption of maritime traffic through the Gulf is therefore certainly not unprecedented, but any attempt would likely be met by a rapid, forceful response from the U.S. navy, limiting the likelihood of a persistent supply shock. HISTORY LESSON Indeed, history has shown that severe disruptions to global oil supplies have tended to be short-lived. Iraq's invasion of neighbouring Kuwait in August 1990 caused the price of Brent crude to double to $40 a barrel by mid-October. Prices returned to the pre-invasion level by January 1991 when a U.S.-led coalition started Operation Desert Storm, which led to the liberation of Kuwait the following month. The start of the second Gulf war between March and May 2003 was even less impactful. A 46% rally in the lead-up to the war between November 2002 and March 2003 was quickly reversed in the days preceding the start of the U.S.-led military campaign. Similarly, Russia's invasion of Ukraine in February 2022 sparked a sharp rally in oil prices to $130 a barrel, but prices returned to their pre-invasion levels of $95 by mid-August. These relatively quick reversals of oil price spikes were largely thanks to the ample spare production capacity available at the time and the fact that the rapid oil price increase curbed demand, says Tamas Varga, an analyst at oil brokerage PVM. Global oil markets were also rocked during the 1973 Arab oil embargo and after the 1979 revolution in Iran, when strikes on the country's oilfields severely disrupted production. But those did not involve the blocking of Hormuz and were not met with a direct U.S. military response. SPARE CACITY The current global oil market certainly has spare capacity. OPEC , an alliance of producing nations, today holds around 5.7 million barrels per day in excess capacity, of which Saudi Arabia and the United Arab Emirates hold 4.2 million bpd. The concern today is that the vast majority of the oil from Saudi Arabia and the UAE is shipped via the Strait of Hormuz. The two Gulf powers could bypass the strait by oil pipelines, however. Saudi Arabia, the world's top oil exporter, producing around 9 million bpd, has a crude pipeline that runs from the Abqaiq oilfield on the Gulf coast in the east to the Red Sea port city of Yanbu in the west. The pipeline has capacity of 5 million bpd and was able to temporarily expand its capacity by another 2 million bpd in 2019. The UAE, which produced 3.3 million bpd of crude oil in April, has a 1.5 million bpd pipeline linking its onshore oilfields to the Fujairah oil terminal that is east of the Strait of Hormuz. But this western route could be exposed to attacks from the Iran-backed Houthis in Yemen, who have severely disrupted shipping through the Suez Canal in recent years. Additionally, Iraq, Kuwait and Qatar currently have no clear alternatives to the strait. It is possible that Iran will choose not to take the dramatic step of blocking the strait in part because doing so would disrupt its own oil exports. Tehran may also consider any further escalation fruitless in light of U.S. involvement and will instead try to downplay the importance of the U.S. strikes and come back to nuclear negotiations. In the meantime, spooked energy markets, fearing further escalation, are apt to respond to the U.S. strikes with a sharp jump in crude prices. But even in a doomsday scenario where the Strait of Hormuz is blocked, history suggests markets should not expect any supply shock to be persistent. Enjoying this column? Check out Reuters Open Interest , your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn and X. This article was generated from an automated news agency feed without modifications to text.
The Hindu
31 minutes ago
- The Hindu
Rupee sinks 23 paise to close at 86.78 against U.S. dollar
The rupee plunged 23 paise to close at a five-month low of 86.78 (provisional) against the U.S. dollar on Monday (June 23, 2025) amid a strengthening dollar and volatile crude oil prices following the U.S. strike on Iran's nuclear facilities. A sharp decline in the domestic equity markets further pressured the rupee, according to forex experts. However, strong FII inflows, along with a rise in the country's forex reserves prevented further losses in the rupee, they said. At the interbank foreign exchange, the rupee opened at 86.75 against the greenback and traded in the range of 87.67 to 86.85 before settling at its five-month low of 86.78 (provisional), down 23 paise from its previous close of 86.55 on Friday (June 20, 2025). The rupee had closed at 86.70 against the dollar on January 13. 'The rupee fell to 86.85 due to higher oil prices in the morning and then oil started to fall and gave importers an opportunity to buy dollars for their near-term imports. The rupee rose to 86.67 but was not able to rise any further as oil demand was quite high,' Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said. 'The rupee went back to 85.82, where the Reserve Bank was a seller and kept the rupee movement on hold beyond today's low,' he said. Brent crude, the global oil benchmark, rose 0.08% to $77.07 per barrel in futures trade. The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.60% higher at 99.29. 'The range of rupee is expected to be 86.50-86.90, depending on how oil prices behave,' Mr. Bhansali added. In the domestic equity market, the 30-share BSE Sensex tanked 511.38 points to settle at 81,896.79 while Nifty dropped 140.50 points to 24,971.90. Foreign institutional investors (FIIs) purchased equities worth ₹7,940.70 crore on a net basis on Friday (June 20, 2025), according to exchange data. The latest weekly data released by the Reserve Bank of India on Friday (June 20, 2025) showed India's forex reserves rising $2.294 billion to $698.95 billion during the week ended June 13.
Time of India
an hour ago
- Time of India
India–US trade deal hits rough patch days before 26% tariff deadline
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