Oil prices set to rise as Middle East war escalates, analysts say

Oil markets moved higher as the war in the Middle East escalated and both sides issued threats that could put energy facilities at risk. Market participants said the combination of strikes and counterstrikes has heightened short-term supply concerns and prompted risk premia in crude prices.

The move followed reports of attacks and threats affecting key oil and gas infrastructure, with front-month Brent and WTI contracts posting significant gains across recent sessions. Traders noted increased backwardation in nearby contracts and higher tanker freight rates as indicators that physical tightness is influencing futures pricing. Coverage also cited instances where Brent briefly moved above the $100-per-barrel threshold amid peak risk sentiment.

Supply-side vulnerabilities have become more pronounced: disruptions to loading at Gulf terminals and the risk of strikes on export facilities have reduced effective flows, while concerns about closure or restricted transit through the Strait of Hormuz have amplified the shock potential. Energy agencies and market analysts warn that attacks on infrastructure could remove significant volumes from the market and sustain price upside.

Politically, the developments are embedded in an expanding U.S.-Israel campaign against Iranian targets and Tehran’s retaliatory posture. Reports of strikes on strategic hubs such as Kharg Island and attacks on South Pars-linked facilities have intensified fears that the conflict could prolong and widen, complicating efforts to stabilise global supplies. The geopolitical dimension remains the dominant price driver for oil at present.

Analysts say short-term volatility is likely to remain elevated while the conflict is unresolved, and some forecasters have raised mid-year Brent assumptions in stress scenarios. Market participants will watch for any coordinated releases from strategic reserves, OPEC+ supply responses, or diplomatic developments that could ease tensions; absent such moves, risk premia are expected to keep crude prices supported.