Oil Prices Surge Amidst US-Israel-Iran Tensions

Oil markets are bracing for significant volatility next week following recent U.S. And Israeli strikes on Iran, escalating geopolitical tensions in the Middle East. International benchmark Brent crude closed at a seven-month high of $72.87 on Friday, February 28, 2026, as war fears intensify.

Geopolitical Risks and Potential Supply Disruptions

The conflict raises concerns about potential disruptions to oil supplies, particularly if attacks affect key oil shipping routes, and infrastructure. Scenarios considered before the recent conflict anticipated a temporary price spike if attacks didn’t impact oil infrastructure. However, a more substantial and prolonged price increase is expected if oil infrastructure or supplies are interrupted, especially through disruption of tanker traffic in the Strait of Hormuz.

Strait of Hormuz: A Critical Chokepoint

Approximately 20% of the world’s daily oil supply passes through the Strait of Hormuz. Saudi Arabia, Iraq, and the United Arab Emirates rely heavily on this strait for their oil exports. Whereas analysts suggest Iran has limited incentive to close the strait entirely – as it would also impede its own exports and impact its primary customer, China – the risk of disruption remains a significant factor driving up prices. Source: AP News

Iran’s Oil Exports and China’s Role

Iran currently exports around 1.6 million barrels of oil per day, with the majority destined for China. Privately owned refineries in China are less affected by U.S. Sanctions that restrict Iran’s oil sales to other countries. Any disruption to Iranian oil supplies could force Chinese customers to seek alternative sources on the global market, further increasing demand and prices. Source: Global News

Market Reaction and Price Projections

Brent crude has already experienced a notable increase, reaching a seven-month high. Experts predict potential price swings in the coming weeks, with some analysts suggesting Brent crude could reach $80 a barrel. Source: Economic Times

Recent Developments

Reports indicate Iran has warned vessels against passing through the Strait of Hormuz, further heightening concerns about potential supply disruptions. Source: Bhaskar English

Key Takeaways

• Oil prices have risen sharply due to escalating tensions between the U.S., Israel, and Iran.
• The Strait of Hormuz remains a critical vulnerability in global oil supply chains.
• Disruptions to Iranian oil exports could exacerbate price increases.
• Brent crude is currently trading at a seven-month high of $72.87 per barrel.