Oil futures surged on Sunday night after US strikes on Iran’s three main nuclear sites intensified fears of a potential supply shock, amid growing concerns that Tehran could retaliate by closing a key maritime chokepoint.
Brent crude (BZ=F), the international benchmark, gained as much as 5.7%, hovering above $80 per barrel.
West Texas Intermediate (CL=F) futures also jumped more than 4% before trimming gains to hover north of $75 per barrel.
Oil prices had already posted weekly gains on Friday following the outbreak of conflict between Israel and Iran more than a week ago.
What Wall Street once viewed as a low-probability event is now being treated as a significantly heightened risk.
“Should oil exports through the Strait of Hormuz be affected, we could easily see $100 oil,” said Andy Lipow, president of Lipow Oil Associates.
Following the outbreak of the Israel-Iran war, JPMorgan analysts forecast that under a “severe outcome,” a closure of the Strait of Hormuz could push oil prices to $120–$130 per barrel.
If crude climbs into that range, analysts predict gasoline and diesel prices could rise by as much as $1.25 per gallon.
