Brent Crude Surges Over $74 as Israel-Iran Conflict Escalates, Oil Prices Up 10%

Oil prices surged on Friday following confirmation that Israel had launched a strike on Iran, significantly raising fears of a broader conflict in the Middle East—home to some of the world’s most crucial energy supply routes.

Brent crude, the international benchmark, spiked more than 10% in early trading—its sharpest jump since January—before settling at $74.47 per barrel, still 5% higher than the previous day’s close.

Markets React Sharply: Oil Up, Stocks Down, Gold Climbs

While oil prices cooled slightly after the initial shock, volatility swept across global markets:

• Japan’s Nikkei index fell 0.9%

• UK’s FTSE 100 dropped 0.3%

• Dow Jones opened down 1.5%

• S&P 500 dipped 0.8%

As investors sought safety, gold rose 1.2%, hitting a two-month high of $3,423.30 per ounce, and demand for the Swiss franc also increased.

"Right now, markets are reacting to early signs of risk. But in the next day or two, traders will need to consider how far this could escalate,” said Saul Kavonic, head of energy research at MST Financial.

Energy Experts Warn of Supply Risks and Potential for $100 Oil

After the strike, the Israeli Defence Forces (IDF) said Iran launched around 100 drones in retaliation.

Vandana Hari of Vanda Insights explained:

“It’s a tense situation, though it could be resolved quickly—like previous flare-ups between Israel and Iran. But there’s a serious risk of escalation that could impact regional oil supply.”

According to Capital Economics, if Iran’s oil infrastructure is targeted, Brent prices could rise to $80-$100 a barrel. However, they believe increased output from other oil producers might help contain long-term inflationary effects.

Fuel Price Impact: Too Early to Predict

Rod Dennis of the UK auto group RAC cautioned it’s “too soon to tell” how pump prices will react:

“It depends on whether wholesale fuel prices remain high in the coming days and how much margin retailers apply.”

Strait of Hormuz: The World's Energy Chokepoint at Risk

A major fear among analysts is a potential disruption in the Strait of Hormuz—the narrow passage through which 20% of global oil supply flows.

Flanked by Iran and Oman/UAE, this vital route connects the Persian Gulf to the Arabian Sea. A closure or attack on tankers passing through it could send energy markets into chaos.

“A worst-case scenario would see Iran block or threaten this corridor, crippling global oil shipments,” analysts warn.

Outlook: Global Markets Brace for What Comes Next

The full impact of the Israel-Iran escalation remains uncertain. As diplomatic and military responses unfold, energy markets, equities, and commodities will remain highly sensitive.

For now, traders, consumers, and governments are watching closely—hoping the crisis will not evolve into a full-blown regional war that could rock the global economy.