Oil prices surged dramatically on Friday, posting their biggest single-day gain in over three years, after Israeli air strikes targeted Iranian nuclear facilities — a development that threatens to destabilize one of the world’s most critical energy-producing regions.
Brent crude, the international oil benchmark, jumped nearly 8% to $74.88 a barrel in early afternoon trading in Asia, while U.S. benchmark West Texas Intermediate (WTI) rose more than 8% to $73.67. The sharp move triggered a broader rush to safe-haven assets, with gold climbing 1.2% to $3,427 per ounce.
The air strikes — which Israeli officials have not publicly confirmed — are widely believed to have hit Iranian nuclear infrastructure, raising concerns of a wider regional conflict. Traders and analysts fear that escalating tensions could disrupt oil and gas shipments from the Middle East, especially through the narrow and strategically vital Strait of Hormuz.
Michael Alfaro, Chief Investment Officer at Gallo Partners, a hedge fund specializing in energy and industrials, described the strike as a “seismic escalation” in the region. “We’re staring down the barrel of a prolonged conflict that’s almost certain to keep oil prices elevated,” he warned.
The Strait of Hormuz — a chokepoint through which roughly one-third of global seaborne oil passes — is particularly at risk. Iran has previously threatened to close the waterway in response to military aggression, a move that would immediately disrupt energy flows from major producers like Saudi Arabia, Iraq, and Qatar.
In addition to oil, global liquefied natural gas (LNG) supplies could also be affected. Qatar, one of the world’s leading LNG exporters, relies on Hormuz to reach global markets at a time when supply chains are already under pressure.
Helima Croft, a former CIA analyst now at RBC Capital Markets, said a key question is whether Iran will respond by directly targeting energy infrastructure. “The key question is whether Iran seeks to internationalise the cost of tonight’s action by targeting regional energy infrastructure,” Croft said.
The attack comes at a politically sensitive time for the United States. Former President Donald Trump, now once again in office, has previously vowed to keep oil prices low as part of efforts to fight inflation. Following Russia’s 2022 invasion of Ukraine, the Biden administration had released 300 million barrels from the U.S. Strategic Petroleum Reserve (SPR). Trump, who previously criticized that drawdown, may now face pressure to deploy remaining SPR stocks — currently at about 400 million barrels, far below the 727 million barrel capacity — if supply disruptions persist.
Attention is also turning to the Opec+ alliance of oil-producing nations. The group, which includes Iran and is led by Saudi Arabia, has been slowly increasing output in recent months. However, Friday’s developments may prompt the Trump administration to pressure Saudi Arabia and other members to release additional supplies to stabilize markets. Notably, Saudi Arabia condemned Israel’s actions on Friday, further complicating the geopolitical dynamics.
Financial markets across Asia responded sharply to the turmoil. Japan’s Nikkei 225 fell by 1.3%, while South Korea’s Kospi dropped 1.28% and Hong Kong’s Hang Seng declined 0.7%. Cryptocurrencies also faced pressure, with Bitcoin falling as much as 3% during Asian trading hours, briefly touching $103,000 before recovering slightly to $104,000.
With the energy sector once again on edge, global markets are bracing for further volatility. Whether this escalation marks the start of a prolonged conflict or a brief flare-up could determine the trajectory of oil prices — and global inflation — in the weeks ahead.
