U.S. benchmark oil prices rose slightly on Monday morning, reflecting investor caution regarding Iran’s response to recent U.S. strikes on its nuclear facilities. West Texas Intermediate crude futures gained 0.2%, nearing $74 a barrel, following a significant 4% spike the previous evening as trading reopened. This price is the highest since late January, and at this level, gasoline prices could average about $3.30 a gallon—assuming prices remain stable.
Analysts suggest that the uncertainty generated by President Donald Trump’s military orders parallels his earlier indecisiveness regarding tariffs, complicating market predictions. UBS analysts conveyed that the ultimate impact on oil prices will largely depend on Iran’s retaliatory actions. Should Iran choose a restrained response, oil prices might decrease, though the potential for disruptions in Middle Eastern energy infrastructure remains heightened, which could lead to price surges.
Trump urged vigilance in keeping oil prices down via social media and highlighted concerns over Iran potentially closing the Strait of Hormuz, a crucial passage for global oil transport. Reports indicated that Iran’s parliament supported such a closure, though final authority rests with its national security council. UBS views a closure as unlikely, as it would negatively affect Iran’s own exports and other nations.
Analysts from ING identified four options for Iran following the strikes: full escalation involving other nations; disruption of the Strait of Hormuz; support for terror attacks in the U.S. and Europe; or no action. They emphasized that the likely outcome of the U.S. strikes will be increased uncertainty affecting oil prices rather than immediate military escalation.
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