GreenergyDaily
Jun. 16, 2025
Oil rose after Israel and Iran continued attacks on each other over the weekend, with the market bracing for an escalation that could disrupt supply from a region that produces around a third of the world’s crude.
Brent jumped as much as 5.5% at the open before paring gains to trade around $75 a barrel, while West Texas Intermediate was near $74. Israel launched an attack on the South Pars gas field, forcing the halt of a production platform, after strikes on Iran’s nuclear sites and military leadership last week.
While an attack on Iran’s gas-producing infrastructure is a concern, the biggest fear for the oil market centers on the Strait of Hormuz. Middle East producers ship about a fifth of the world’s daily output through the narrow waterway, and prices could soar further if Tehran attempts to block the route.
“We don’t expect to see another significant leg higher in crude prices” unless there are attempts to close the Strait of Hormuz or Iran-backed Houthis in Yemen target shipping, said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “We see Brent capped below $80.”
Israel’s strike on South Pars triggered a powerful explosion and fire at a gas-processing plant on Saturday, the semi-official Tasnim news agency reported. Iran’s gas is mainly for domestic use and is not widely exported, although a type of oil known as condensate is also produced and shipped overseas.
Iran’s biggest oil customer is China, and attempts to block the Strait of Hormuz would likely disrupt Tehran’s own exports, cutting valuable revenue. From an economic and political standpoint, shutting the waterway doesn’t make sense, according to Muyu Xu, an analyst at Kpler.