Iran Unrest Sparks Oil Price Surge

Global oil prices escalated sharply on Tuesday, with Brent futures climbing 2.5% to $65.47 and U.S. West Texas Intermediate crude settling 2.8% higher at $61.15 a barrel. This surge was primarily driven by concerns over potential disruptions to Iranian crude exports, a key supplier within OPEC. The escalating anti-government demonstrations in Iran, met with a severe government crackdown, have introduced significant geopolitical risk into the market, contributing an estimated $3-$4 per barrel premium.

Adding to the supply uncertainty, U.S. President Donald Trump issued a warning, threatening a 25% tariff on any business conducted with Iran. This stance specifically impacts major trading partners like China, the largest buyer of Iranian crude. In separate incidents, four Greek-managed oil tankers were reportedly struck by unidentified drones in the Black Sea while en route to load oil, further raising concerns about the security of global energy routes.

These supply-side worries have temporarily eclipsed concerns about a potential glut, even as the market considers the possibility of increased crude supply from Venezuela. Following the ousting of its president, Venezuela is reportedly set to hand over significant oil reserves to the U.S. However, the immediate focus remains on the geopolitical instability surrounding Iran and the direct threats to established oil flows.