Following a report by CNN on Israel’s potential military action against Iranian nuclear sites, citing unnamed officials, Brent crude briefly climbed above $66 per barrel, and West Texas Intermediate jumped as much as 3.5% before easing back.
While Israeli leadership has yet to make any final decisions, the prospect of a strike stoked market volatility.
The crude market has already been turbulent in response to shifting news about the fate of Iran-U.S. nuclear negotiations—talks that could potentially lift sanctions and allow additional Iranian barrels back into a market that is expected to show surplus later in the year.
Heightened tensions and the increased risk of conflict in the Middle East—responsible for nearly a third of global oil supply—threaten to derail those negotiations and introduce a new layer of geopolitical uncertainty.
Investor nerves were further rattled, with traditional safe-haven currencies such as the Swiss franc and Japanese yen seeing brief surges. However, these moves moderated as the situation remained fluid.
According to Bloomberg, officials from the U.S. Department of Defense and the National Security Council did not provide immediate responses to inquiries, while the Israeli embassy in Washington also declined to comment.
Recent developments have eclipsed earlier forecasts of a more balanced oil market in the second half of the year, especially as OPEC+ moves to restore production and U.S. shale producers hold off expansion at lower price points.
On the diplomatic front, Iran’s Supreme Leader Ali Khamenei recently voiced skepticism about any breakthrough in the ongoing talks with Washington. Should sanctions be lifted, analysts at Bloomberg Intelligence point out that WTI could slump to as low as $40 a barrel.
Still, Iran has been able to maintain crude exports despite intensifying western sanctions, with estimates suggesting the nation has boosted output by about a million barrels per day over recent years. Should those barrels be removed from the market, it could drive crude prices up by approximately $8 a barrel, according to Goldman Sachs.
