Israel-Iran Strikes Raise Oil Supply Disruption Fears Amid Rising Prices

Oil prices surged sharply due to escalating strikes between Israel and Iran, raising fears of potential disruptions to Middle East oil exports, particularly through the vital Strait of Hormuz, which channels about a fifth of the world's oil supply. Brent crude and U.S. West Texas Intermediate futures increased by roughly 1.5% early Monday after a prior session rally of over 7%, driven by attacks on Iranian energy infrastructure linked to its largest gas field and fuel storage sites. Despite these tensions, no immediate impact on Iranian oil production or exports has been reported, and some analysts note that OPEC+ spare capacity roughly matches Iran's output, potentially offsetting supply shortfalls. Indian officials and oil companies, while concerned about profit margins due to higher crude prices, do not foresee a major supply crisis, citing India's non-reliance on Iranian oil and skepticism about a Strait of Hormuz blockade. However, the risk perception remains elevated, increasing insurance costs and leading vessels to avoid conflict-prone waters, with markets wary of Iran's potential retaliation which could escalate regional conflict and threaten broader oil supply stability. Industry experts, including Energy Aspects' Richard Bronze, suggest that while the conflict fuels price volatility, a significant supply disruption is unlikely at this stage.