Oil prices soared on the back of fresh intelligence suggesting Israel may be preparing to strike Iranian nuclear sites. Investors were spurred by the risk of supply disruption and broader regional fallout, as markets recalibrated amid heightened uncertainty.
Oil markets reacted sharply to reports US intelligence had flagged Israel’s potential plans to target Iran’s nuclear infrastructure. Brent crude futures climbed by 97 cents to $66.35 per barrel, while US West Texas Intermediate (WTI) futures gained 96 cents, reaching $62.99, all on Wednesday, 21 May 2025. The sudden spike reflects fears that any escalation could rattle supply chains in a region crucial for global energy security.
Despite CNN reporting that Israeli decision‑makers have not yet finalised a course of action, the intelligence prompted immediate moves in oil markets. Analysts from ING described the situation as fraught with risk: an Israeli strike would jeopardise Iranian output and potentially strain supplies across the Middle East.
Iran stands as OPEC’s third‑largest crude producer. Any disruption to its output, or Iran’s response through measures like blocking the Strait of Hormuz, could have far‑reaching ramifications. The strait is a vital artery for exports from Saudi Arabia, Kuwait, Iraq and the UAE.
Meanwhile, market dynamics offered a mixed picture. US crude inventories rose by 2.5 million barrels last week, according to American Petroleum Institute figures, even as gasoline and distillate stocks declined. That inventory build offers some mitigation to supply concerns, but traders remain wary. All eyes now turn to the official release of data from the US Energy Information Administration later today.
Compounding the situation, Kazakhstan has bucked OPEC+ calls for production cuts by increasing output by roughly 2% in May. This divergence within OPEC+ underscores the fractured nature of global supply cohesion and leaves markets exposed to geopolitical shocks.
The backdrop to these developments includes stalling nuclear talks between the US and Iran, where negotiators remain far apart despite several rounds of discussions this year. Sources suggest that indirect diplomacy may lack momentum, and in the absence of progress, military options remain on the table.
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