Oil Prices Soar Over 13% After US-Israel Strikes On Iran- How War Drives Up Oil Costs

Oil prices climbed sharply in Asian markets on Monday after the United States and Israel carried out major strikes on Iran over the weekend. Traders quickly responded to the growing conflict, adding what experts call a "risk premium" to crude prices due to fears of supply disruptions.

Brent crude climbed more than 12% to touch $82 at the start of trading, before easing back to around $80, as markets reacted to the military strikes carried out over the weekend.

Escalation of Military Action

The recent wave of attacks reportedly targeted important locations inside Iran. Among those killed was Iran's Supreme Leader, Ali Khamenei, along with several senior officials.
In response, Iran launched missile strikes against Israel and other Middle Eastern countries that have close ties with the United States, including Bahrain, Kuwait, Qatar, and the United Arab Emirates.

The widening conflict has raised concerns that tensions could spread further across the region, affecting not only security but also global trade and energy markets.

Strait of Hormuz Under Threat

A major concern for oil traders is the situation in the Strait of Hormuz, one of the world's most important oil shipping routes. Nearly 20% of global oil consumption passes through this narrow waterway every day.

Reports indicate that Iran has attacked several vessels passing through the strait. If shipping is disrupted, even temporarily, global oil supplies could face serious interruptions. Higher insurance costs, shipping delays, and security risks could all add to the pressure on oil prices.

Analysts have warned that attacks on oil tankers significantly increase the risk to energy supplies, especially if the situation continues to worsen.

OPEC+ Moves to Increase Production

Amid rising concerns, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed in a recent meeting to increase oil output by 206,000 barrels per day.

This production hike may help reduce some of the supply pressure caused by the conflict. However, market experts believe that if the conflict expands or the Strait of Hormuz is blocked, the additional supply may not be enough to fully stabilise prices.
Oil markets often react strongly not only to actual supply shortages but also to the fear of future disruptions.

Continued Military Operations

US President Donald Trump said that military operations against Iran would continue in the coming days. He also warned that more American troops could face danger if tensions escalate further.

His remarks have increased uncertainty in global markets, as investors now expect the conflict to continue rather than end quickly.

Global Impact of Rising Oil Prices

Higher oil prices can affect economies around the world. When crude prices rise, fuel costs usually increase as well. This can lead to higher transportation expenses, rising food prices, and added financial pressure on businesses and consumers.

Financial markets are expected to remain volatile as the situation develops. For now, the focus remains on whether shipping through the Strait of Hormuz can continue safely and whether diplomatic efforts can prevent further escalation.

The coming days will be crucial in determining whether oil markets stabilise - or face even more turbulence.

How A War Impacts Surge In Oil Prices?

War often leads to a surge in oil prices because it creates fear and uncertainty around supply. When fighting happens in or near major oil-producing regions, investors worry that production facilities, pipelines, or shipping routes could be damaged or blocked.

Even if the actual supply is not immediately reduced, the risk alone is enough to push prices higher. Traders add a "risk premium" to oil prices to prepare for possible shortages. In addition, wars can disrupt transportation routes like the Strait of Hormuz, which carries a large share of the world's oil.

When supply appears uncertain while global demand remains steady, prices naturally rise. This is why oil markets react very quickly and sharply during times of conflict.