Oil Price News: Crude Oil Soars as Israel Attacks Iran, Spiking Supply Concerns

Oil Soars to Four-Month High on Middle East Headlines

On Friday, June 13, news broke of Israeli attacks on Iran. Israel reportedly carried out multiple strikes, targeting Iran’s nuclear facilities, missile factories, and leading military figures. The news triggered a flight for safety, boosting demand for safe-haven assets, including gold.

Meanwhile, fears of the attacks on oil refineries and potential disruption to supply sparked a crude oil price rally. WTI Crude soared from $67.595 to a high of $74.615 following news of the attacks.

Broader Middle East Conflict Risk Spikes – Which Way Will Oil Go?

In contrast to previous Israeli attacks on Iran, the Iranian government warned of a military response, potentially fueling a regional conflict. The Kobeissi Letter reported:

“Iran says it will respond ‘harshly’ against Israel and the US following tonight’s attacks.”

Israel’s attacks follow reports of Iran threatening strikes against US bases in the region if nuclear agreement negotiations fail. On June 12, Israel declared it was fully prepared to attack Iran, leading to the US evacuating key personnel from US sites, including the Iraqi embassy.

WTI struck a four-month high in early trading on June 13. While easing back from morning highs, an Iranian military response could fuel a stronger price breakout, potentially bringing $80 into play.

In October 2024, crude oil hit a high of $78.766 after Israel launched attacks on Iran.

CN Wire reported that Westpac’s Robert Rennie sees crude oil prices breaking January highs, $79.355. However, he downplayed the prospect of a sustained military conflict, stating:

“Given that the strikes appear to have been directed more at the Iranian military general staff, including the head of the IRGC and senior nuclear scientists, and that the US was not involved, that suggests that what we saw today was more of a pre-emptive strike and less of a sustained military conflict.”

International Response Pivotal to Near-Term Sentiment

However, Iran’s response and any retaliation from Israel could materially disrupt regional stability. While US-China trade tensions ease, China, Russia, and Iran’s regional allies could fuel further oil price gains.

While downplaying a broader conflict, Robert Rennie warned:

“Traders will, however, be super-focused on Iran’s response and how targeted it is on Israel, versus proxy attacks. Risks going into the weekend are very high, and a push above the January highs for crude is very possible.”

Despite this week’s events and the near-term threat of an escalation in Middle East tensions, Rennie had a more balanced view on the price outlook for oil, stating:

“Bigger picture, we remain of the view that, as we move into the third quarter, we will see prices probing the lower end of the $60 to $65 range, with risks of prices below $60 as we move into the fourth quarter.”

At the time of writing, after hitting a high of $74.615, WTI eased to $71.905, up 6.74%, as markets awaited Iran’s response.

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