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Global oil markets jumped on Sunday after reports that U.S. and Israeli strikes on Iran had killed Supreme Leader Ali Khamenei, a development that traders fear could extend the regional conflict and disrupt supplies. The spike — driven by renewed attacks, counterstrikes and navigation restrictions near a key shipping lane — pushed benchmark crude to levels not seen earlier this year.
In the first trading wave after the strikes, Brent crude briefly touched $82.37 a barrel, its highest intraday mark since January 2025, before easing back to about $78.24 — a gain of more than 7% by late evening, according to Reuters. U.S. crude, traded as West Texas Intermediate, jumped close to 7%, momentarily hitting $75.33 and settling near $71.68.
What drove the move
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Markets reacted to a rapid escalation of hostilities: Israel launched fresh strikes on Iranian targets, and Tehran responded with missile barrages, Reuters reported. Authorities also said missiles struck several oil tankers near the Strait of Hormuz, killing one crew member and underscoring the risk to a corridor that moves about one-fifth of global oil shipments.
Following the exchanges, Iran reportedly moved to limit navigation through the strait. More than 200 vessels — including oil and liquefied natural gas tankers — were anchored near the passage as ship operators delayed transit amid heightened security concerns, Reuters added.
Analysts’ outlook and immediate risks
Investment bank Citi warned that if the confrontation continues, Brent could trade between $80 and $90 a barrel in the coming days, reflecting tighter physical markets and elevated risk premia. Traders are already pricing higher uncertainty into crude and freight rates.
- Supply pressure: Disruptions or restricted traffic through the Strait of Hormuz would constrain exports from major producers and could tighten global supply.
- Shipping and insurance: Rerouting and higher insurance premiums would raise the cost and time of seaborne oil deliveries.
- Price volatility: Short-term spikes are likely as market participants reassess inventories, tanker availability and geopolitical risk.
- Economic impact: Elevated fuel costs could feed into consumer prices and add pressure to inflation and growth forecasts.
For now, details remain fluid and markets are reacting in real time. Traders, energy firms and governments will be watching shipping lanes, insurance notices and official statements from regional actors for signs of how long the disruption might last and whether physical flows of oil will be curtailed.
(Reporting includes material from Reuters.)
