Oil prices surged over 2% on Tuesday as escalating military tensions between Iran and Israel reignited fears of regional instability and potential disruption to global oil supplies. The spike came shortly after U.S. President Donald Trump issued a stark warning urging “everyone” to evacuate Tehran, further fueling uncertainty in global energy markets.
Brent crude futures rose by $1.17, or 1.6%, to $74.40 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed $1.34, or 1.87%, to $73.11. Earlier in the session, both benchmarks had jumped more than 2%. The rally reversed Monday’s losses, when prices fell over 1% on optimism that Iran might be moving toward a diplomatic solution to end hostilities.
However, that optimism quickly faded as Iranian media reported explosions and intense air defense activity in Tehran on the fifth day of fighting. Simultaneously, Israeli cities, including Tel Aviv, faced incoming Iranian missile strikes, triggering air raid sirens and escalating the conflict.
Iran, OPEC’s third-largest oil producer, plays a critical role in global oil markets. Any disruption to its output could send shockwaves through the energy supply chain. Already, Monday’s Israeli strike on Iran’s state broadcaster and widespread damage to its main uranium enrichment facility—confirmed by the head of the U.N. nuclear watchdog—have raised alarm about broader repercussions.
President Trump blamed Iran for not signing a nuclear deal before the conflict intensified, but indicated that Tehran may now be more open to negotiations. A potential agreement could include lifting U.S. sanctions, allowing Iran to export more oil—an outcome that could exert downward pressure on prices over time.
Meanwhile, OPEC+ (which includes Russia and produces nearly half of the world’s oil) expressed confidence in the resilience of the global economy in the second half of 2025. The group also revised down its forecast for oil supply growth from non-OPEC+ nations in 2026.
As the Iran-Israel crisis deepens, oil markets remain highly volatile, balancing between geopolitical escalation and the hope for diplomatic resolution.
