Israel-Iran Conflict Drives Brent Crude Oil Prices to New Highs

Citi has increased its forecast for the average price of Brent crude oil in 2026. If shipping disruptions in the Strait of Hormuz continue until the end of June, the oil price could reach $150 per barrel. Citi's baseline predictions for the second, third, and fourth quarters have been revised to $110, $95, and $80 per barrel, respectively.

The price of Brent crude oil surged to $141.37 per barrel on Thursday, reaching a new high since 2008, significantly higher than the previous day's price of $128 and surpassing the peak during the 2022 Russia-Ukraine conflict. This sharp increase was due to the closure of the Strait of Hormuz for over a month, leading to the largest disruption in oil supply in history. The strait is responsible for transporting about one-fifth of the world's oil.

大华银行上调了布伦特原油的价格预测，指出由于地缘冲突加剧、中东能源设施频繁遭到袭击以及霍尔木兹海峡通行受阻，短期内油价可能突破每桶130美元。此外，大华银行还将2026年第二季度至2027年第一季度的预期从90美元上调至110美元。

Russian Deputy Prime Minister Novak stated that the Middle East conflict has disrupted global energy supplies, causing the most severe energy crisis in 40 years. This disruption has affected at least 20 million barrels of oil and related products daily, equivalent to the recent average daily transport volume through the Strait of Hormuz.

International crude oil prices rose in the short term, with Brent crude increasing by 1.3% to $104.76 per barrel. This increase followed attacks on parts of Iran's South Pars gas field and the Assaluyeh oil facilities.

The escalating conflict between Israel and Iran has led to significant disruptions in global markets, particularly impacting oil prices and investor sentiment. The crisis began with Israel's surprise attack on Iran on Friday, targeting over 100 major sites, including nuclear facilities, missile sites, and energy assets. The strikes killed senior military figures such as Maj Gen Mohammad Bagheri, chief of staff of Iran's armed forces, and Gen Hossein Salami, commander of the Islamic Revolutionary Guard Corps (IRGC), as well as at least six Iranian nuclear scientists. Satellite imagery confirmed significant damage to the Natanz nuclear site, though the fuel enrichment plant remained intact.

In retaliation, Iran launched missile strikes on Israel, targeting cities like Tel Aviv and Haifa, resulting in civilian casualties. The conflict intensified over the weekend, with both nations targeting each other's energy facilities, including fuel depots and natural gas processing plants. Iran has threatened to shut down the Strait of Hormuz, a critical global oil transit route, which processes about 18 to 19 million barrels per day (bpd) of oil and fuel.

The geopolitical turmoil has caused oil prices to surge, with Brent crude futures rising by 7% on Friday and continuing to climb over the weekend. U.S. crude oil prices increased by 3.25% to $75.35 per barrel, while Brent crude rose by 3.26% to $76.65 per barrel. The conflict also triggered a selloff in global stock markets, with the Dow Jones Industrial Average dropping over 700 points on Friday. Safe-haven assets like gold and the U.S. dollar saw increased demand.

Investors remain wary of further disruptions, particularly if Iran follows through on its threat to block the Strait of Hormuz. Analysts warn that such an action could severely impact global oil supply and exacerbate inflationary pressures. The conflict has also raised concerns about broader regional escalation, with potential involvement from other nations like Russia and the U.S. The situation remains fluid, with ongoing strikes and retaliatory actions expected to continue in the coming days.