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The escalating conflict between Israel and Iran has sent shockwaves through global energy markets, prompting oil forecasters to rapidly revise their price outlooks. With military strikes intensifying and fears of supply disruptions mounting, the geopolitical risk premium on oil has returned with a vengeance. Brent crude surged past $78 per barrel in its biggest intraday jump since March 2022, though prices later moderated to around $72.80-$74.65 for Brent and $73.20-$73.42 for WTI as markets assessed the situation. This article explores the latest developments, including targets met in the conflict, shipping lane changes for oil and LNG tankers, and the range of projected oil prices.
The price is expected to remain in the $75 to $84 range unless Israel targets the oil export hubs. If that happens, we could see spikes over $100 until the markets stabilize again.
Conflict Escalation and Targets Hit
The latest round of hostilities began with Israel’s strikes on Iranian military targets, including uranium enrichment facilities, ballistic missile factories, and senior army commanders, as reported by Reuters citing Israeli military sources. Iran retaliated with over 100 drones launched toward Israel, escalating fears of a broader regional conflict. These strikes mark a significant escalation from previous exchanges, such as Iran’s 200-missile barrage in October 2024 and Israel’s restrained response targeting missile factories rather than oil infrastructure.
Key targets met include Israel’s successful strikes on Iran’s military and nuclear-related facilities, which Iranian state media confirmed resulted in the deaths of senior military figures and nuclear scientists. While Israel avoided hitting Iran’s oil and gas infrastructure—such as the critical Kharg Island export terminal—fears persist that future retaliatory actions could disrupt Iran’s 2.1 million barrels per day (bpd) of exports or even target Saudi Arabia’s oil facilities, as occurred in 2019. Iran’s drone response, though limited, signals its intent to maintain pressure, raising the specter of further escalation.
As part of the strikes, the underground area of the site was damaged. This area contains a multi-story enrichment hall with centrifuges, electrical rooms, and additional supporting infrastructure. In addition, critical infrastructure enabling the site’s continuous operation and the Iranian regime’s ongoing efforts to obtain nuclear weapons were targeted.
Analysts note that both sides are treading carefully to avoid a full-scale war. The U.S. has distanced itself from direct involvement, with President Trump expressing frustration over stalled nuclear talks with Iran, while Gulf Arab states have reassured Tehran of their neutrality to protect their own oil facilities. However, the risk of miscalculation remains high, particularly if Iran moves to block the Strait of Hormuz, through which 21 million bpd—roughly a fifth of global oil supply—passes daily.
Comments from General Mike Flynn on X
The comments from General Flynn are an excellent update, and we recommend following @GenFlynn on X. With the precision strikes and leadership taken out, it depends on how Iran retaliates. The following is only a portion of the post, and President Trump and Vice President Vance were tagged.
Shipping Lane Changes for Oil and LNG Tankers
The intensifying conflict has forced oil and LNG tanker operators to adapt, with many rerouting vessels to avoid high-risk areas. The Strait of Hormuz, a critical chokepoint bounded by Iran, Oman, and the UAE, remains the primary concern. Approximately 21% of global oil consumption and a third of LNG tanker traffic flows through this narrow seaway. A potential closure or increased attacks by Iran’s Houthi proxies in the Red Sea could send prices spiraling to $100-$150 per barrel, according to Rystad Energy.
Since mid-January 2024, no LNG tankers (except two Russian-affiliated vessels) have used the Red Sea route due to Houthi attacks, which have targeted over 80 vessels this year. Companies are rerouting LNG shipments around the Cape of Good Hope, adding weeks to transit times and increasing freight costs. Oil tankers are also avoiding the Red Sea, with some opting for the East-West pipeline in Saudi Arabia (7 million bpd capacity) or the UAE’s Fujairah export terminal (1.5 million bpd, 30-40% utilized). However, these alternatives are insufficient to fully offset a Strait of Hormuz disruption.
Insurance companies have raised war risk premiums for cargoes loading from the Persian Gulf, further elevating the cost of energy deliveries. Last week, empty tankers waiting to load at Iran’s Kharg Island terminal fled to safer waters amid fears of an Israeli strike, underscoring the market’s jittery sentiment. These disruptions have tightened the supply-demand balance, particularly for LNG, as Egypt plans increased winter cargo procurements to compensate for potential shortfalls.
Oil Price Forecasts and Ranges
Oil forecasters are grappling with a volatile mix of geopolitical risks and market fundamentals. Saxo Markets’ Charu Chanana projects Brent could hit $80 per barrel if supply risks materialize, though rising OPEC+ output may cap gains. In a worst-case scenario, such as a Strait of Hormuz closure, JPMorgan warns prices could soar past $120 per barrel, with Rystad Energy estimating a range of $100-$150 per barrel for severe disruptions. Capital Economics suggests that targeting Iran’s oil facilities could push Brent to $80-$100 per barrel, though increased output from other producers might limit the spike.
Conversely, weak global demand, particularly from China, and OPEC+’s spare capacity of about 5 million bpd could temper long-term price rises. Posts on X reflect this uncertainty, with some analysts noting that limited strikes may add only $4-$10 per barrel, while others warn of catastrophic jumps if the conflict engulfs the region. Current prices, as of June 13, 2025, show Brent at $72.80-$74.65 and WTI at $73.20-$73.42, but markets remain on edge for Iran’s next move.
Outlook: A Precarious Balance
The Israel-Iran conflict has thrust energy markets into a precarious state, with oil forecasters racing to account for rapidly evolving risks. While recent strikes have spared critical oil infrastructure, the potential for escalation—particularly involving the Strait of Hormuz—looms large. Shipping lane changes and rising insurance costs are already straining supply chains, and LNG markets face tighter conditions as winter approaches. Price forecasts range from a modest $80 per barrel in the near term to a catastrophic $150 per barrel in a worst-case scenario, with fundamentals like OPEC+ spare capacity and weak demand providing some buffer.
As analysts monitor Iran’s response and the U.S.’s diplomatic maneuvering, the energy sector braces for volatility. For now, the market’s cautious optimism hinges on de-escalation, but the Middle East’s history of unpredictability suggests that oil prices could yet face a wild ride.
Sources: Reuters, OilPrice.com, S&P Global, BBC, Rystad Energy, and posts on X.
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