Crude oil prices surged 7 percent higher on Friday, retreating from an intraday spike of 13 percent, driven by escalating geopolitical tensions as Israel and Iran exchanged missile attacks, raising concerns over Middle East supply disruptions. The energy market also found support from U.S. President Donald Trump’s resumption of tariff wars, with the 90-day ceasefire deadline (July 9) approaching and no bilateral trade agreement in sight.
Data compiled by Polymerupdate Research indicated that benchmark Brent crude futures for near-month delivery on the Intercontinental Exchange (ICE) rose 7.02 percent, or US$ 4.87 a barrel, to settle at US$ 74.23 a barrel, up from US$ 69.36 a barrel the previous day. Intraday, Brent surged to US$ 78.50 a barrel, its highest level since January 27. Week-on-week, Brent recorded a 12.5 percent gain.
Meanwhile, U.S. West Texas Intermediate (WTI) crude futures for near-month delivery on the New York Mercantile Exchange (Nymex) saw even stronger gains. According to Polymerupdate Research, WTI futures climbed 7.62 percent, or US$ 4.94 a barrel, to settle at US$ 72.98 a barrel, up from US$ 68.04 a barrel on Thursday. Intraday, WTI futures spiked 14 percent to US$ 77.62 a barrel, the highest since January 21. On a weekly basis, WTI recorded a 13 percent increase. Both contracts posted their largest intraday movements since 2022, when Russia's invasion of Ukraine caused a surge in energy prices.
“The sharp rally was fuelled by escalating tensions between Israel and Iran, coupled with U.S. President Donald Trump’s comments on repositioning American personnel in the Middle East, which heightened fears of potential supply disruptions. Renewed optimism over global trade, following a framework agreement between the U.S. and China to ease trade tensions, also bolstered sentiment for oil demand from the world’s two largest consumers. Additionally, softer-than-expected U.S. inflation data reinforced expectations of a Federal Reserve interest rate cut as early as September,” said an analyst from Kedia Stocks and Commodities Research.
Israel-Iran warIn response to Israel’s missile strikes on Iran’s nuclear and military sites on Thursday, Tehran launched a fierce retaliation on Friday, targeting Tel Aviv and Jerusalem with scores of ballistic missiles. Explosions illuminated the skies over both cities, shaking buildings and triggering widespread alarms. Amid the multiple rounds of strikes, the sound of sirens and detonations echoed across the cities, prompting the Israeli military to urge civilians to seek shelter, as the conflict with Iran appears poised to extend longer than initially anticipated.
Iranian state media on Friday confirmed the death of Revolutionary Guards Commander Hossein Salami, one of Tehran’s top military figures, in Israeli missile strikes on the Natanz uranium enrichment site. Salami, a key figure in Iran’s military hierarchy, oversaw Tehran’s ballistic missile arsenal, which had been deployed against Tel Aviv twice during the ongoing Israel-Hamas war in Gaza.
Reports also indicated the death of Iran’s Armed Forces Chief of Staff, Mohammad Bagheri, in Israeli attacks targeting multiple cities. Following the strikes, Israel confirmed its actions, while U.S. Secretary of State Marco Rubio described them as “unilateral” and clarified that Washington had no involvement. However, Rubio warned Tehran against targeting U.S. interests or personnel in the region.
Reacting to the escalation, U.S. President Donald Trump commented, “Iran cannot have a nuclear bomb. We are hoping to return to the negotiating table. Several individuals in leadership will not be returning,” a veiled reference to the officials killed in the strikes.
Iran’s Supreme Leader Ayatollah Ali Khamenei, in a recorded message on Friday, declared, “We will not allow them to escape safely from this great crime they committed.” Iran’s UN ambassador reported that 78 people were killed and over 320 wounded in the Israeli strikes early Friday. In response to escalating threats, Israel deployed U.S.-supplied ground-based air defense systems in the region to intercept Iranian missiles. The United Nations has called on both Israel and Iran to exercise restraint and avoid further escalation.
War spread fearsThere is growing fear that the Israel-Iran conflict could spread across the Middle East, disrupting crude oil supplies from the region. Both the United States and Israel have begun winding down embassy operations and recalling non-essential staff from the region. Reports suggest that Iran is targeting a combination of Israeli, international Jewish sites, U.S. allies in the Gulf, and even American interests, potentially forcing the United States into direct involvement in the conflict. The Trump administration has warned Iran to finalize a deal or face severe consequences.
The conflict has already drawn in multiple countries, with Jordan intercepting Iranian drones and warplanes en route to Israel. Iran has garnered support from several Islamic nations, including Palestine and Syria, as well as militant organizations like Hamas and Hezbollah. If the conflict escalates further, especially with direct U.S. involvement, fears are mounting that other Islamic countries in the Middle East might intervene, at least to safeguard their own interests.
Such a scenario could have a massive impact on crude oil production and exports. The Middle East, home to key members of the Organisation of the Petroleum Exporting Countries (OPEC), accounts for nearly one-third of global crude oil supply. This share rises to over 40 percent when including OPEC’s allied members, such as Russia.
US inventory declineThe U.S. Energy Information Administration (EIA) reported a decline of 3.6 million barrels in U.S. commercial crude oil inventories (excluding the Strategic Petroleum Reserve) last week, bringing total inventories to 432.4 million barrels. This level is approximately 8 percent below the five-year average for this time of year.
U.S. crude oil refinery inputs averaged 17.2 million barrels per day (bpd) for the week ending June 6, 2025, reflecting an increase of 228,000 bpd from the previous week’s average. Refineries operated at 94.3 percent of their operable capacity during the week. Gasoline production increased to an average of 9.7 million bpd, while distillate fuel production declined by 97,000 bpd, averaging 4.9 million bpd.
Crude oil imports averaged 6.2 million bpd, down 170,000 bpd from the prior week. Over the past four weeks, imports averaged 6.2 million bpd, a 13.3 percent decrease compared to the same period last year. Total motor gasoline imports, including finished gasoline and blending components, averaged 914,000 bpd last week, while distillate fuel imports averaged 104,000 bpd. The crude oil market remains supported by renewed buying interest, underpinned by tighter inventories and resilient demand.
OutlookIsrael’s attack on Iran pushed crude prices to their highest level in five months, raising concerns that further escalation could disrupt navigation through the Strait of Hormuz—a vital waterway that facilitates the transit of approximately 19 million bpd of crude and petroleum products, accounting for one-fifth of global oil consumption. Continued conflict escalation is likely to drive crude oil prices higher.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
