Crude oil futures rise amid Israel-Iran conflict, fear of supply disruption grows
Crude oil futures rose on Monday between Israel and Iran, raising concerns about disruptions in global oil supply. The two countries continued to launch attacks over the weekend, adding pressure to the already volatile energy market.
Brent crude futures were trading at $74.65 a barrel, up 0.57% while WTI crude was $72.13, up 1.18%. In India, crude oil contracts are also awarded a multi-commodity exchange (MCX). The contract rose 1.25% in June to reach Rs. Closed price of Rs 6,364. 6,285, while contracts in July rose 1.15% to Rs. 6,231.
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The sharp rise was a 13% rise in crude oil prices during the meeting and then closed nearly 7% driven by geopolitical concerns. Media reports pointed out that Israel’s latest strike targeted Iran’s southern Pals natural gas field, forcing production platforms to close. Israeli troops reportedly attacked Iranian nuclear and military sites a few days later.
Iran, a major oil producer and member of OPEC, told regional mediators that he was reluctant to negotiate a ceasefire under current conditions. The conflict has raised alarms about the stability of the Hormuz Strait, which is a key maritime channel with nearly 20% of the world’s oil supply flowing. Analysts warn that any disruption in the region could soar.
Currently, Iran produces about 3.3 million barrels (BPD) per day and exports more than 2 million BPD of oil and fuel. OPEC+’s backup production capacity is roughly equal to Iran’s output, and if exports are interrupted, it provides limited global supply space.
Meanwhile, U.S. President Donald Trump urged the two countries to seek a deal, but acknowledged that conflict sometimes “must be eliminated.” Trump reiterated U.S. support for Israel but stopped calling for a stop to military strikes. German Chancellor Friedrich Merz said Canada’s ongoing G7 summit could provide a platform to gradually reduce conflict.
China’s economic data also affects market sentiment. The country’s retail sales rose 6.4% year-on-year in May, surpassing expectations, but industrial output fell slightly to 5.8%. As one of the world’s largest oil consumers, China’s demand outlook remains a key factor in global crude oil trends. However, China’s original treatment fell 1.8% in May, the lowest level since August due to maintenance of major refineries.
As tensions rise and energy markets rise, oil prices may fluctuate further in the days ahead, especially if conflicts in the Middle East deepen or cause any physical supply disruptions, analysts said.
