amid Iran-Israel conflict as supply fears shake markets- Oil prices climbed sharply on Tuesday, driven by growing tensions between Iran and Israel. The market responded swiftly to news of partial gas production cuts in Iran and a fire at the South Pars gas field—one of the world’s largest. Brent crude futures jumped by $1.23, or 1.7%, reaching $74.46 per barrel by 10:23 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose $1.08, or 1.5%, trading at $72.85 per barrel. Both benchmarks had initially surged over 2% during early trade before slipping and rebounding again in a highly volatile session. Despite the price surge, analysts say there’s no major disruption to global oil flows yet. However, fears surrounding the safety of shipping routes and regional energy facilities are starting to impact sentiment.

The sharp rise in oil prices is closely tied to geopolitical tensions in the Middle East. On Saturday, an Israeli airstrike triggered a fire at Iran’s South Pars gas field, a massive reserve Iran shares with Qatar. In response, Iran partially suspended gas production at the facility. That was followed by another Israeli strike on Iran’s Shahran oil depot, raising fears of a broader impact on infrastructure.

Still, most major oil and gas flows remain untouched, and the global supply has not yet been significantly interrupted. Ole Hansen, a commodities analyst at Saxo Bank, said, “The market is largely worried about disruption through the Strait of Hormuz, but the risk of that is very low.”

Crude oil prices jumped above $74 amid Middle East tensions, raising fears of $4–$5 gas this summer. U.S. gasoline averages $3.48 per gallon today, but analysts warn it could surge if the Strait of Hormuz is disrupted.

The Strait of Hormuz is a critical shipping channel, handling about one-fifth of the world’s oil supply. Any disruption there can create immediate ripples across global markets. On Tuesday, two oil tankers collided and caught fire near the Strait, drawing more attention to the growing risks in the region. In addition, there have been reports of increased electronic interference, complicating operations for companies moving oil and fuel. Still, Hansen added that Iran is unlikely to risk closing the strait, as it would lose vital oil revenue. The United States, under President Trump, also wants to keep oil prices stable to avoid pushing inflation higher. Interestingly, while prices are rising, actual oil supply remains strong. The International Energy Agency (IEA) on Tuesday released its monthly report, slightly revising global oil demand down by 20,000 barrels per day. At the same time, it increased its estimate for global oil supply by 200,000 barrels per day, bringing the total projected supply growth to 1.8 million bpd.

This balance between high supply and uncertain demand is keeping prices from rising even more sharply—at least for now.

Beyond the Middle East tensions, investors are also focusing on central bank actions. The U.S. Federal Open Market Committee (FOMC), which sets interest rates, is holding a key meeting this week. Any shift in U.S. monetary policy could affect demand forecasts for oil, especially if higher rates weigh on economic growth.

Tamas Varga, analyst at PVM Oil Associates, noted that central bank decisions are now a critical driver for oil traders, alongside geopolitical risks.

With rising Middle East tensions, potential threats to oil shipping routes, and mixed signals from supply and demand data, oil prices are likely to remain volatile in the coming days. Markets are especially sensitive to any signs of physical disruptions—whether from damaged infrastructure, tanker issues, or new sanctions.

As of now, the situation remains fluid. But one thing is clear: geopolitical events are back at the center of global energy pricing, and traders are watching every headline coming out of the Gulf region.

Oil prices are rising due to fears of disruption after Israeli strikes on Iran's gas and oil infrastructure.

No major supply cuts yet, but risks remain around the Strait of Hormuz and Middle East exports.