Oil prices closed higher on Wednesday in volatile trading, driven by concerns over potential supply disruptions due to the conflict between Iran and Israel and the possible involvement of the United States. Brent crude rose 25 cents to $76.70 per barrel, while WTI gained 30 cents to $75.14, despite falling about 2% earlier in the session.
Tensions escalated after Iran’s Supreme Leader, Ayatollah Ali Khamenei, rejected U.S. President Donald Trump’s demands for unconditional surrender. Trump stated that his patience had run out but had yet to decide whether to join Israel’s military campaign against Iran. He hinted that an attack on Iran’s nuclear facilities was under consideration.
Analysts believe that if the U.S. becomes involved, the risk to energy infrastructure in the region would increase significantly, including the potential closure of the Strait of Hormuz—a critical passage for one-third of global oil trade—which could push oil prices up to $120 per barrel. As the third-largest oil producer in OPEC, Iran produces about 3.3 million barrels per day.
Meanwhile, the Federal Reserve decided to hold interest rates steady and still plans to cut them this year, but has slowed the pace of reductions due to potential inflationary pressure from the Trump administration’s tariff policies. A total rate cut of 0.5% is still expected for this year, with a slower adjustment projected into 2026 and 2027.
Goldman Sachs forecasts a geopolitical premium of around $10 per barrel on Brent crude due to Middle East tensions. Should Iran’s oil supply be disrupted, Brent could surge past $90 per barrel.
However, Goldman’s base-case scenario—previously projecting Brent to average $60 per barrel without supply disruptions—is now in doubt. This shift follows President Trump’s remarks suggesting he might join Israel in attacking Iran. “I might do it, or I might not,” he said, sparking controversy among Republicans.
Goldman also highlighted vulnerabilities in Middle Eastern export routes, such as the Bab el-Mandeb Strait, which has been disrupted by attacks from Yemen’s Houthi rebels.
Meanwhile, Barclays warned that oil prices could soar above $100 per barrel if the conflict intensifies. If half of Iran’s oil exports (approximately 1 million barrels/day) are disrupted, Brent could reach $85 per barrel. As of now, Brent stands at $76.56, and WTI at $75.22, with the market still awaiting a clear official position from the U.S.
Technical Outlook
Currently, oil is moving within the $73–$76 range, with resistance at the downward angle located at the recent high of $77.57. Should conflict-related tensions persist and supply concerns increase, prices could rise again. The next resistance levels to watch are $80.80, $84.50, and $90.54.
Ade Yunus (RND – Global Market Strategies)
