Oil Prices Surge Over 8% as Iran Retaliates With Major Missile Strike on Israel

Brent crude surged more than 8% on Friday, peaking at a 13% intraday gain, after Iran launched a wave of missile strikes on Israel in retaliation for the Israeli Air Force’s targeted assault on Iranian nuclear and military infrastructure. The sudden escalation has jolted energy markets already grappling with rising geopolitical risk across the Middle East.

The Iranian strike, described by Israeli officials as involving up to 150 ballistic missiles in two waves, targeted multiple sites across Israel according to the Jerusalem Post. While Israeli defense forces successfully intercepted several of the projectiles, casualties have climbed to at least 40 injured, including two in critical condition. Israeli Defense Minister Yoav Gallant responded shortly after the strikes that Iran had crossed a red line by targeting civilian areas, vowing a severe response.

The Iranian attack came just hours after Israel’s unprecedented preemptive operation, codenamed “Rising Lion,” in which over 100 high-value Iranian targets were struck. According to Oilprice.com’s Cyril Widdershoven, targets included critical uranium enrichment facilities at Natanz and Fordow, the Parchin military complex, and numerous IRGC command centers. Several senior Iranian commanders, including key figures in the Quds Force and IRGC Aerospace Force, were reportedly killed.

Though Iran’s oil infrastructure remains untouched for now, traders have begun pricing in heightened risk to future supply. The fear of potential disruption to the Strait of Hormuz—through which nearly 20% of global oil flows—has pushed energy markets into a defensive crouch. According to Helima Croft of RBC Capital Markets, while a prolonged blockade of the strait is unlikely due to U.S. naval presence, even a marginal increase in risk can move markets sharply.

Oil market watchers are also bracing for further escalation. Analyst Daan Struyven at Goldman Sachs raised his short-term price target, warning that the conflict could briefly cut 1.75 million bpd of Iranian oil, pushing Brent above $90, but expects prices to fall back to the $60s by 2026 as supply recovers.

While Israel has so far avoided targeting Iran’s oil terminals at Kharg Island or Iran’s major refineries such as the Abadan refinery (360,000 bpd) the Persian Star refinery (320,000 bpd) and the Isfahan refinery (370,000 bpd), the possibility of Tehran retaliating by hitting Gulf infrastructure or closing Hormuz cannot be ruled out. Cyberattacks, proxy warfare, or missile strikes on Western military bases in the region are also on the table, according to analysts.

Still, some are skeptical the rally can last. Spare capacity from OPEC+ members like Saudi Arabia and the UAE, along with potential increases in U.S. shale output, could ease the impact of any short-term supply shock.

For now, oil markets remain volatile, with uncertainty over potential further attacks keeping traders on edge through the weekend.

By Tom Kool for Oilprice.com

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