Oil steadied, after jumping to the highest in almost five months on Tuesday, as speculation the US may join Israel’s attack on Iran stoked concerns about supply disruptions in West Asia.

Brent traded above $76 a barrel after closing 4.4 per cent higher in the previous session, while West Texas Intermediate was near $75. President Donald Trump met with his national security team on Tuesday, after demanding Iran’s “UNCONDITIONAL SURRENDER” and warning of a possible strike against the country’s leader — Ayatollah Ali Khamenei — in a social media post.

Iran’s crude-exporting infrastructure has been spared so far, and most of the fallout has been confined to shipping. West Asia produces around a third of the world’s oil and a wider conflict could drive prices even higher.

The biggest concern for the oil market centres on the Strait of Hormuz, although there are no signs that Iran is seeking to disrupt shipping through the narrow waterway. About a fifth of the world’s daily crude output passes through the strait at the entrance to the Persian Gulf.

“Trump’s demand for Iran’s “unconditional surrender” and threats against its supreme leader signal diplomacy is off the table,” said Charu Chanana, chief investment strategist at Saxo Markets Ltd. in Singapore. “Any disruption to Iranian exports, or a worst-case scenario blockade of Hormuz, could send prices sharply higher.”

The hostilities have rattled global markets, with investors seeking havens in assets such as gold, and volatility in oil surging to a three-year high. There has been a jump in hedging by crude producers, and the volume of futures and options changing hands has soared.

Israel launched surprise attacks on Iran’s nuclear sites late last week, but American weapons are seen as crucial to achieving a more complete destruction of Tehran’s atomic program than anything it can do alone.

Prime Minister Benjamin Netanyahu has sought to draw the US — which has provided defensive support against Iranian missile fire — deeper into the conflict. He told ABC News on Monday that the countries share a common enemy in Iran, and that it’s in America’s interest to support Israel.

Iran has prepared missiles and other military equipment for strikes on US bases in the Middle East should the nation join Israel’s war against the country, the New York Times reported, citing unidentified American officials who have reviewed intelligence reports.

Meanwhile, US industry figures showed the nation’s crude inventories fell by more than 10 million barrels last week. It would be the biggest drawdown since last summer if confirmed by official data later on Wednesday. 

.

More stories like this are available on bloomberg.com

©2025 Bloomberg L.P.

Published on June 18, 2025