Oil Surges 10% on Iran Conflict, Analysts Warn of Possible $100 Per Barrel Spike

Global oil prices soared on Sunday following U.S. and Israeli strikes on Iran, with traders warning that crude could climb to $100 per barrel if disruptions to Gulf supply routes persist.

Brent crude, the international benchmark, jumped 10% in over-the-counter trading to around $80 a barrel, according to market participants. The rally comes after Brent had already climbed to $73 on Friday  its highest level since July  amid mounting tensions in the Middle East before the outbreak of hostilities.

Strait of Hormuz in Focus

Energy analysts say the most critical factor driving the price surge is the potential closure of the Strait of Hormuz, a narrow but strategically vital waterway through which more than 20% of the world’s oil supply is transported.

Following Tehran’s warning to shipping companies, most tanker operators, oil majors and trading houses have reportedly suspended crude, fuel and liquefied natural gas shipments through the strait.

Ajay Parmar, director of energy and refining at ICIS, said the military escalation alone supports higher prices, but the closure of Hormuz would have a far greater impact.

“We expect prices to open much closer to $100 a barrel and perhaps exceed that level if we see a prolonged outage of the Strait,” he said.

Supply Risks and OPEC+ Response

The OPEC+ alliance on Sunday agreed to raise output by 206,000 barrels per day (bpd) from April. However, analysts noted that the increase represents less than 0.2% of global demand and would do little to offset a major supply disruption.

According to Rystad Energy, even if Saudi Arabia diverts oil through its East-West pipeline and the UAE maximises alternative export routes, a closure of the Strait of Hormuz could still remove between 8 million and 10 million bpd of crude from global markets.

Rystad projected that prices could initially jump by $20, pushing Brent to around $92 per barrel when futures trading resumes.

RBC Capital Markets analyst Helima Croft said Middle Eastern leaders have cautioned Washington that a prolonged war could drive oil above $100 per barrel. Analysts at Rabobank were slightly more conservative, forecasting prices holding above $90 in the near term.

Global Ripple Effects

The crisis has prompted Asian governments and refiners to reassess emergency oil reserves and alternative supply routes. Analysts at Kpler said India may increase purchases of Russian crude to offset potential shortfalls from the Middle East.

The surge in oil prices adds to broader market volatility already triggered by the escalating conflict. Higher energy costs could intensify inflationary pressures globally, complicating economic recovery efforts in several regions.

With tensions showing little sign of easing, energy markets are bracing for a potentially prolonged period of instability that could reshape global supply flows and pricing dynamics in the weeks ahead.