With Brent crude hitting $76.45 and fears of a US strike on Iran’s nuclear sites, the Israel-Iran conflict threatens global energy flows. Can OPEC+ stabilize markets, or will the Strait of Hormuz become a flashpoint?
June 18, 2025, 1:54 PM IST
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Oil Prices Surge Amid Israel-Iran Tensions
On June 17, 2025, oil prices spiked over 4% as fears of a broader Israel-Iran conflict, potentially involving the United States, gripped global markets. Brent North Sea crude rose 4.4% to $76.45 per barrel, while West Texas Intermediate (WTI) climbed 4.3% to $74.84, driven by escalating rhetoric from US President Donald Trump, who demanded Iran’s “unconditional surrender” and hinted at strikes on its Fordow uranium enrichment facility. US stocks fell, with the S&P 500 dropping 0.84% and the Nasdaq Composite declining 0.91%, reflecting investor anxiety over geopolitical risks and potential energy disruptions. Israel’s recent strikes on Iran’s South Pars gasfield, Fajr Jam gas plant, Shahran oil depot, and Shahr Rey oil refinery, while sparing export facilities like Kharg Island, have heightened concerns about supply chain vulnerabilities, particularly through the Strait of Hormuz.
Israel-Iran Tensions : Context and Evolution
The Israel-Iran conflict, reignited by Israel’s October 7, 2023, Gaza campaign, escalated dramatically in June 2025 with Israel bombing over 100 Iranian targets, including nuclear sites and energy infrastructure, since June 13. Iran retaliated with over 200 ballistic missiles targeting Israeli cities like Haifa and Tel Aviv, damaging a Haifa oil refinery. The conflict, initially focused on Iran’s nuclear program, shifted to energy assets, with Israel striking domestic facilities like South Pars, which supplies 70% of Iran’s gas, and Shahran, holding 260 million liters of fuel.
Oil prices, volatile since April 2025, surged 7% on June 13 to $74.23 (Brent) and $72.98 (WTI) after Israel’s initial strikes, peaking at $78.50 and $77.62 intraday, the highest since January 2025. Prices cooled to $71-$73 by June 16 amid reports of Iran seeking a ceasefire via intermediaries like Qatar and Oman, but rebounded on June 17 as Trump’s threats and ongoing airstrikes stoked fears of US involvement. The Strait of Hormuz, through which 20-30% of global oil (18-20 million barrels daily) and 20% of LNG flow, remains a critical concern, though no closure has occurred historically.
Israel-Iran Tensions : Connection to Previous Events
The Air India Boeing 787 crash on June 12, 2025, in Ahmedabad, though unrelated, impacted markets similarly, with Boeing’s stock falling 5% and airline shares like Delta and United dropping 4-5% due to fuel cost fears. The crash, linked to a possible dual-engine failure with the Ram Air Turbine active, raised aviation safety concerns, paralleling the energy sector’s vulnerability to sudden disruptions. Both events highlight India’s role in global crises, from its aerospace ambitions (Axiom-4 mission delays) to its aviation market, now under scrutiny. The Israel-Iran tensions also intersect with India-Pakistan frictions, as Modi’s rejection of US mediation on June 18 reflects India’s wariness of US involvement in regional conflicts, potentially complicating US-India cooperation on energy or security.
Israel-Iran Tensions : Indian Involvement
India, a major oil importer reliant on Middle Eastern supplies, faces heightened risks from the Israel-Iran crisis. With 85% of its crude oil imported, including 3% from Iran (down from 10% pre-sanctions), India’s $700 billion economy is vulnerable to price spikes. Brent at $76.45 could raise India’s import bill by $10-15 billion annually, fueling inflation and straining its $250 billion trade deficit. Indian Oil Corporation and Reliance Industries, key refiners, have diversified to Russian and Saudi oil, but a Strait of Hormuz disruption could choke 60% of India’s imports. India’s diplomatic balancing act—maintaining ties with Iran, Israel, and the US—while advocating for de-escalation via BRICS and SCO platforms, mirrors its proactive role in the Axiom-4 mission, where ISRO ensured safety amid delays. Posts on X from Indian users like @Indian_Analyzer urge self-reliance in energy, reflecting public concern.
Israel-Iran Tensions : Stakeholder Reactions
Governments:
- US: Trump’s Truth Social post threatening Iran’s leadership and Fordow facility escalated tensions, with the US deploying fighter jets to the Middle East. His sanctions on Iran’s oil exports, tightened since April 2025, aim to curb Tehran’s $50 billion annual oil revenue.
- Israel: Prime Minister Benjamin Netanyahu vowed to continue strikes until Iran’s nuclear and military capabilities are neutralized, sparing Kharg Island to avoid global backlash.
- Iran: Tehran denied Shahr Rey refinery damage but confirmed Shahran and South Pars strikes, promising “harsh” retaliation. Iran’s parliament member Esmail Kowsari threatened to close the Strait of Hormuz, though analysts deem this unlikely due to economic reliance on exports.
- India: The Ministry of External Affairs called for restraint, with Oil Minister Hardeep Singh Puri assuring stable supplies via OPEC+ and Russian imports.
International Organizations:
- OPEC+: Analysts like Thomas O’Donnell expect OPEC+ (Saudi Arabia, Russia) to offset Iran’s 3.3 million barrels daily production if disrupted, with 5 million barrels of spare capacity.
- International Energy Agency (IEA): The IEA revised global oil demand down by 20,000 barrels daily but raised supply estimates by 200,000 barrels to 1.8 million, signaling ample stocks.
- UKMTO: Reported electronic interference in the Strait of Hormuz, impacting vessel navigation, but no shipping disruptions.
Public Sentiment:
- On X, global users like @Reuters highlighted oil price volatility, while @sentdefender noted a 4% spike after US strike discussions. Indian users expressed inflation fears, with @BharatSpaceX linking oil costs to the Air India crash’s fuel scrutiny. Iranian accounts urged retaliation, while Israeli posts justified strikes as self-defense.
Experts:
- Clayton Seigle (CSIS) warned Israel might target Kharg Island to cripple Iran’s $30 billion oil exports, risking ally alienation.
- Dan Pickering (Pickering Energy Partners) noted markets’ calm due to spared export facilities but cautioned a “stray bomb” could spike prices to $120.
- Homayoun Falakshahi (Kpler) highlighted Kharg Island’s vulnerability, handling 90% of Iran’s 1.7 million barrels daily exports.
- Deutsche Bank forecasted $120 per barrel if the Strait of Hormuz closes, disrupting 20 million barrels daily.
Short- and Long-Term Impacts
Short-Term:
- Economic: Brent at $76.45 adds a $10 per barrel “security premium,” raising global fuel costs. India’s petrol prices may rise 5-7p per liter, per Capital Economics, impacting its $1.2 trillion consumer market. US airline stocks (Delta, United) fell 4%, echoing losses post-Air India crash, due to fuel cost fears. The finance card above shows SPY at $597.87, down 0.84% from June 17’s $602.20, reflecting market unease.
- Social: Iran faces fuel shortages in Tehran, with Shahran’s 8 million liters daily supply disrupted, sparking public anger. India’s public demands energy self-reliance, per X posts.
- Diplomatic: Trump’s rhetoric risks drawing the US into direct conflict, straining ties with
