Oil prices surge due to Israel-Iran tensions

New Delhi

Oil prices jumped sharply on Tuesday as tensions between Israel and Iran escalated. The surge came after U.S. President Donald Trump called for the evacuation of Tehran, raising fears of a bigger conflict in the Middle East.

Brent crude rose as much as 2.2% before easing slightly to trade above $73 per barrel. West Texas Intermediate (WTI) also increased, hovering around $72. This follows Monday’s brief price drop when Iran seemed to lower tensions. But Israel’s continued attacks, especially on Iran’s nuclear sites, reignited concerns.

A major worry is the Strait of Hormuz, a narrow but crucial oil route through which 20% of the world’s oil passes. Reports of a possible security incident near the area on Tuesday increased traders’ worries. The UK Navy also reported issues with navigation signals, affecting ships in the region.

Many shipping firms are now avoiding bookings through the Gulf due to safety fears. Although Iran’s oil export systems haven’t been damaged yet, the risk of disruption is rising.

The conflict has already pushed oil prices above levels seen before the fighting began. Producers are now hedging at record levels, and trade in oil futures and options is increasing.

Morgan Stanley raised its oil price forecasts, citing the regional conflict as a major risk. Meanwhile, the White House may meet Iranian officials this week to discuss reviving the nuclear deal and stopping the war.

Israel claims to have gained control of Iran’s airspace and caused severe damage to its military and nuclear facilities. This has sparked fears of a wider war in the oil-rich region, which supplies nearly one-third of global oil.