What is going on with oil prices? Crude oil spiked on June 23, and then suddenly gave up part of their gains. This volatility stems from the escalating military conflict in the Middle East. Investor fears intensified after US strikes on Iran, as such actions could end up in significant disruptions to supply in the region.

At the start of this week, Brent crude futures for August delivery rallied by 2.4% to $79.00 per barrel, while WTI light crude futures surged by 2.5% to $73.84 per barrel. Both contracts initially jumped by 4% to reach four-month highs, with Brent briefly spiking to $81 per barrel. But the euphoria was short-lived.

Later, benchmark oil gave back part of its gains amid uncertainty over Iran’s next moves. The lack of a clear stance from the White House on its conflict with the Islamic Republic added further fuel to the fire.

To recap, over the weekend, Washington carried out a series of strikes on three key Iranian nuclear facilities. This triggered an angry response from Iran’s leadership, including threats of retaliation. On June 23, Iran resumed attacks against Israel. The two sides exchanged strikes.

In addition, Iranian authorities are reportedly considering blocking the Strait of Hormuz in response to the attacks by Israel and the US. Experts warn that such a move would cut off a critical shipping route in the Middle East and severely disrupt oil and gas supplies.

Hostile relations between Tehran and Washington could also escalate tensions into a full-blown military standoff. It is possible that the US may impose further sanctions on Iran’s oil industry, further derailing exports to parts of Asia and Europe.

According to ANZ analysts, the US strikes on Iran “marked a significant escalation” of the conflict. Against this backdrop, experts suggest that oil prices could remain in the $90–$95 per barrel range.

Given the current circumstances, the likelihood of Iran blocking oil flows in the Middle East, particularly through the Strait of Hormuz, is increasing. The already explosive situation is being fueled by the risk of new sanctions from the White House. Under these conditions, successful nuclear negotiations between Iran and the US appear unlikely, ANZ concludes.