Oil prices surged on Wednesday following reports that Israel may be preparing for a military strike on Iranian nuclear facilities, according to new U.S. intelligence cited by CNN. The news sent Brent crude above $66 per barrel, while West Texas Intermediate (WTI) rose as much as 3.5% before easing slightly.
The potential for conflict has reignited concerns over stability in the Middle East, a region that supplies roughly one-third of the world’s crude oil. The report did not confirm whether Israeli leadership has made a final decision, but the possibility of military action has added a significant geopolitical risk premium to oil markets. The timing of the report is critical, as it comes amid fragile negotiations between the U.S. and Iran over the latter’s nuclear program. Analysts warn that any escalation could derail diplomatic progress and disrupt global energy supplies.
“This development underscores the high stakes involved in the nuclear talks and the potential for significant market disruption if diplomacy fails,” said Robert Rennie, head of commodity and carbon research at Westpac.
The geopolitical tension also briefly lifted safe-haven currencies like the Swiss franc and Japanese yen, though those gains were later pared. U.S. and Israeli officials have not commented on the intelligence report. Israel has long considered military options to counter Iran’s nuclear ambitions, but the effectiveness of such a strike remains uncertain due to the fortified nature of many Iranian facilities. Meanwhile, the oil market had been anticipating a potential supply increase later this year, with OPEC+ planning to ease production cuts and U.S. shale output still showing room for growth. However, prices near $50 per barrel could limit further expansion, according to ConocoPhillips’ CEO.
Iran’s Supreme Leader recently expressed doubt about the outcome of the current negotiations with Washington. Analysts at Bloomberg Intelligence suggest that if sanctions on Iranian oil exports were lifted, WTI prices could fall to $40 per barrel.