Morning Highlights: Market on Edge: Oil Prices Stable Ahead of Iran’s Move Post-US Strikes

Crude prices climbed on Monday to their highest levels since January after the U.S. confirmed its military participation in Israel’s weekend attacks on Iranian nuclear facilities, escalating tensions in the Middle East and renewing concerns over supply security.

Market snapshot (as of 6:30 a.m. EST):

• Brent (Aug): $77.57 (+$0.56)

• WTI (Aug): $74.35 (+$0.51)

Earlier in the session, both benchmarks surged—Brent touched $81.40 and WTI reached $78.40—before paring gains and briefly dipping into negative territory in European trading.

Geopolitical risk premium still in play

Prices have risen around 11% for Brent and 9% for WTI since the conflict began on June 13. Monday’s session opened strongly following President Trump’s statement that the U.S. had “obliterated” Iran’s nuclear facilities in a joint strike with Israel. Iran quickly responded, calling Trump a “gambler” and warning that U.S. assets in the region are now legitimate military targets.

Despite the escalation, prices flattened out by mid-morning as traders assessed the lack of actual supply disruptions. “The geopolitical risk premium is fading, as so far there has been no supply disruptions,” UBS analyst Giovanni Staunovo said. “But... market participants are likely to maintain a risk premium for now.”

Strait of Hormuz under close watch

The market remains laser-focused on the Strait of Hormuz, through which roughly 20% of global oil flows. While there have been no confirmed disruptions to tanker traffic, even the threat of interference has prompted concerns that delays could occur and spike prices.

“All eyes remain on the Strait of Hormuz... and whether Iran will seek to disrupt tanker traffic,” said Ole Hansen of Saxo Bank.

Short-term price scenarios

Goldman Sachs said in a Sunday note that if tanker flows through Hormuz were halved for one month, Brent could spike to $110 per barrel before settling into a prolonged premium if disruptions persist. The bank still assumes no significant sustained disruption, citing mutual interest in keeping energy markets stable.

Iran walks a tightrope

Iran, OPEC’s third-largest producer, exports over 2 million barrels per day, most of which pass through the same chokepoint it might threaten. Analysts noted that Iran’s economic reliance on oil revenues limits how aggressively it can act without triggering domestic economic pain.

“Sustained closure of the Strait would be a double-edged sword for Iran,” said Sugandha Sachdeva of SS WealthStreet. “It would severely damage their own economy, which is already under strain.”