Taaza Wire | June 18, 2025
Iran-Israel Conflict Oil Prices surge for the second consecutive session. The ongoing conflict in the Middle East, now in its sixth day, is shaking energy markets amid fears of supply disruptions through the vital Strait of Hormuz.
Global oil prices rallied on Tuesday and extended gains into early Wednesday trading as investors braced for wider fallout from the hostilities.
The escalating Iran-Israel conflict is rattling global oil markets, pushing prices higher for a second consecutive session. As geopolitical tensions in the Middle East enter the sixth day, fears of disrupted oil supplies through the Strait of Hormuz—a critical chokepoint—are keeping investors on edge. Source Reuters
Iran-Israel Conflict Oil Prices Surge Brent and WTI Higher
In early Asian trading on Wednesday, Brent crude futures rose 19 cents (0.25%) to $76.64 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 23 cents (0.31%) to $75.07 per barrel.
These gains follow Tuesday’s sharp rally, where oil benchmarks jumped more than 4%, driven by the growing possibility of supply chain disruptions in the Gulf.
Strait of Hormuz in Spotlight Again
The Strait of Hormuz, a narrow maritime route between Oman and Iran, is responsible for transporting nearly 20% of global seaborne oil. On Tuesday, two oil tankers collided near the strait and caught fire, adding further uncertainty to an already volatile region.
Reports have also emerged of electronic interference affecting ships’ navigation systems, according to the United Kingdom Maritime Trade Operations (UKMTO). This has reignited concerns reminiscent of past naval tensions in the area.
U.S. and Iran: Escalation Continues
U.S. President Donald Trump on Tuesday called for Iran’s “unconditional surrender”, marking a significant hardening of Washington’s stance. In response, the U.S. military is deploying additional fighter aircraft to the Middle East, signaling a readiness for broader involvement in the conflict.
This dramatic escalation has stirred panic among oil traders, fearing the conflict could spill over into key energy infrastructures.
Iran’s Role in the Global Oil Supply Chain
Iran, the third-largest producer within OPEC, pumps out approximately 3.3 million barrels per day (bpd) of crude oil. Any disruption in Iran’s output could have wide-reaching impacts on global oil prices.
However, energy analysts suggest that other OPEC members might tap into their spare production capacity to offset any shortfall, at least in the short term. Still, markets remain jittery.
Fed Decision Looms Amid War-Driven Uncertainty
As if geopolitical tensions weren’t enough, investors are also closely watching the U.S. Federal Reserve, which is in its second day of policy discussions. The Fed is widely expected to keep interest rates steady at 4.25%-4.50%, but the war could change that.
According to market analyst Tony Sycamore (IG), the situation could force the Fed to adopt a more dovish tone, potentially cutting rates by 25 basis points as early as July, rather than September as previously expected.
“The Middle East crisis could become a catalyst for the Fed to act sooner, similar to their response after the October 7, 2023 Hamas attack,” Sycamore noted.
Lower interest rates typically boost economic activity and oil demand, but the war-driven oil price surge may create fresh inflationary pressure—making the Fed’s decision more complex.
Inventory Data Supports Iran-Israel Conflict Oil Prices Surge
According to American Petroleum Institute (API) data released on Tuesday, U.S. crude and gasoline inventories fell last week, while distillate stocks rose. Falling inventories tend to support higher prices, adding another bullish layer to an already tense market.
Key Takeaways for Indian Readers
- Petrol and diesel prices in India could rise if global oil continues to climb.
- Inflationary pressure might return due to higher fuel costs impacting transportation and logistics.
- Global equity markets are reacting to both oil prices and geopolitical instability—investors should remain cautious.
What Next?
With both military movements and diplomatic rhetoric intensifying, oil markets will likely remain volatile. The coming days will be crucial, especially if the Strait of Hormuz sees more incidents or if Iranian oil exports take a direct hit.
Stay tuned to Taaza Wire for real-time updates on this evolving story. We’ll continue to track Middle East developments, oil market reactions, and how it affects India—from fuel prices to inflation and the stock market.
Faqs
Why are oil prices rising in June 2025?
Oil prices are increasing due to the escalating conflict between Iran and Israel, which is threatening supply routes like the Strait of Hormuz.
How does the Iran-Israel war affect global oil supply?
The Strait of Hormuz, near the conflict zone, is a major oil shipping lane. Any disruption here impacts 20% of global oil trade.
Will petrol and diesel prices increase in India due to the Iran-Israel war?
Yes, international oil price hikes typically lead to higher domestic fuel prices in India.
What is the current price of Brent crude oil today?
As of June 18, 2025, Brent crude is trading around $76.64 per barrel.
Is the Strait of Hormuz blocked due to the Iran-Israel conflict?
It’s not fully blocked, but recent tanker collisions and electronic interference have raised alarm.
How does the U.S. response to the Iran-Israel conflict impact oil prices?
U.S. military deployments and political statements add to market uncertainty, pushing prices higher.
Will OPEC increase production to control oil prices?
Some OPEC members may use spare capacity to offset losses from Iran, but decisions depend on the evolving situation.
How does war in the Middle East affect global inflation?
Rising oil prices fuel inflation globally by increasing transport and manufacturing costs.
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