May 21, 2025, Singapore— Crude oil prices surged today following reports that Israel is preparing a potential military strike on Iran’s nuclear facilities, heightening fears of escalation in the Middle East. Brent crude climbed above $66 per barrel, while West Texas Intermediate (WTI) futures jumped approximately 3.5% to $64.19 per barrel, driven by concerns over possible disruptions to global oil supply.

The geopolitical uncertainty has added a significant risk premium to oil prices, despite ongoing expectations of increased supply from OPEC+ and US shale production later this year.

Rising Tensions Fuel Market Anxiety

A recent CNN report, citing US intelligence, indicated that Israel may be planning strikes on Iranian nuclear sites, though no final decision has been confirmed by Israeli officials. This development comes as the Trump administration pursues diplomatic negotiations with Tehran, which Iran’s Supreme Leader Ali Khamenei has publicly doubted will succeed.

The prospect of military action has increased significantly in recent months, particularly if US-Iran talks fail to address Iran’s uranium enrichment program. Such an outcome could further destabilize the region, which supplies about a third of the world’s crude oil.

Did You Know?
Iran’s nuclear program, including its Bushehr power plant, has been a focal point of international concern since the 1970s. The Bushehr facility, operational since 2011, generates approximately 2% of Iran’s electricity.

Oil Market Dynamics Amid Geopolitical Risks

Oil prices have been volatile this year, largely trending downward due to rising supply from OPEC+ nations and weaker global demand. However, the current geopolitical tensions have temporarily overshadowed these fundamentals. Recent data suggests Iran has increased its oil exports by roughly 1 million barrels per day over the past two years, despite tightened sanctions from the US, UK, and Europe.

A disruption to this supply could push Brent crude prices up by approximately $8 per barrel, according to industry analysts. Conversely, if sanctions on Iran’s oil exports are lifted, WTI prices could plummet to as low as $40 per barrel, market projections indicate.

ALSO READ | US Intelligence Issues Warning of Possible Israeli Strike on Iran’s Nuclear Facilities.

Broader Economic Implications

The spike in oil prices has also influenced financial markets, with safe-haven currencies like the Japanese yen and Swiss franc gaining ground. The US Department of Defense and National Security Council have not yet responded to requests for comment, and the Israeli embassy in Washington declined to provide a statement.

Meanwhile, US shale production remains robust but requires prices above $50 per barrel to sustain growth, according to recent industry reports. As traders monitor the situation, the oil market remains on edge, with potential outcomes hinging on both diplomatic efforts and military developments.