Market Reactions and Forecasts

June 13, 2025 – Global oil prices experienced their sharpest single-day surge in years following Israel’s unprecedented military strikes on Iran, raising fears of a wider Middle East conflict and potential disruptions to global energy supplies. Brent crude futures briefly touched $78 per barrel, up 13% from the previous day, while U.S. West Texas Intermediate (WTI) crude soared to $77.62, marking the biggest intraday jump since Russia’s invasion of Ukraine in 2022 .

The attack targeted Iran’s nuclear facilities, military leadership, and key infrastructure, killing top officials including the Chief of Staff of the Iranian Armed Forces and nuclear scientists. Iran vowed severe retaliation, heightening concerns over further escalation. Meanwhile, U.S. stock futures slumped, with the S&P 500 down 1.4% and the Nasdaq dropping 1.6% as investors fled to safe-haven assets like gold and the Swiss franc .

Why Are Oil Prices Surging? Geopolitical Tensions and Supply Risks

The immediate driver behind the oil price surge is the fear of supply disruptions from the Middle East, which accounts for nearly 30% of global crude production. Iran, a major OPEC+ member, currently exports around 3 million barrels per day (bpd), primarily to China. Any retaliatory action that impacts Iranian exports or regional shipping routes could tighten global supplies significantly .

A critical concern is the Strait of Hormuz, a vital chokepoint through which 20% of the world’s oil flows (18-19 million bpd). Analysts warn that if Iran blocks the strait—a worst-case scenario—oil prices could skyrocket to $120-$130 per barrel 610. However, some experts argue that Iran is unlikely to take such drastic measures, as it would harm its own economy and alienate key trade partners like China .

Market Reactions: Stocks Tumble, Safe Havens Rally

The oil price jump triggered a broad market sell-off, with Dow Jones futures falling over 540 points and tech stocks leading declines. Investors shifted to gold, which rose 1% to $3,413.6 per ounce, while the U.S. dollar and Japanese yen strengthened amid heightened risk aversion .

Energy stocks, however, surged as higher crude prices boosted profit expectations. Meanwhile, OPEC+ nations, including Saudi Arabia and Russia, condemned Israel’s attack but have yet to announce any production changes. Analysts suggest that OPEC+ may increase output by 411,000 bpd in August to stabilize markets if tensions persist .

Oil Price Forecast: Will the Rally Last?

While the oil price surge reflects immediate geopolitical panic, some analysts believe fundamentals may soon reassert control. Anas Alhajji of Energy Outlook Advisors argues that even if Iran’s oil exports halt completely, prices are unlikely to reach $100 per barrel due to ample OPEC+ spare capacity and resilient U.S. shale production .

Technical indicators suggest WTI crude could test $80 if the conflict escalates further, but resistance near $72.50 may cap gains in the short term. The 200-day moving average near $65 remains a key support level if prices retreat .

Natural Gas Prices Edge Higher Amid Oil Volatility

While oil dominated headlines, U.S. natural gas prices rose to $3.60/MMBtu, supported by lower production and rising liquefied natural gas (LNG) demand. Warmer U.S. weather forecasts could further boost cooling demand, but high storage levels may limit upside .

Conclusion: A Fragile Balance Between Geopolitics and Market Fundamentals

The oil price surge underscores how quickly geopolitical shocks can disrupt global energy markets. While further escalation could push prices toward $100, a de-escalation or OPEC+ intervention may lead to a pullback. Investors should monitor Iran’s retaliation, Strait of Hormuz risks, and U.S. diplomatic moves closely in the coming days.

For now, volatility is expected to remain elevated, with oil traders weighing supply risks against weakening global demand signals and potential Fed rate cuts later this year .

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