International Financial Markets Remain Volatile due to Intensifying Israel-Iran Conflict
Headline: Global Oil Prices Surge Amidst Israel-Iran Conflict: A Look at the Impact and Market Reactions
The ongoing Israel-Iran conflict in mid-2025 caused a temporary yet significant spike in global oil prices. This surge was mainly due to fears of supply disruptions and the strategic vulnerability of the Strait of Hormuz, a critical chokepoint for about one-third of global oil exports.
Key Details
- Oil Prices Peaked: Brent crude oil prices rose from around $66 per barrel before the conflict to as high as $78-$80 during peak tension, representing an approximately 17% increase. Prices briefly reached $79 per barrel after Israeli and U.S. military actions against Iran, before easing to about $68 after ceasefires.
- Risk Premium and Supply Concerns: The rise in oil prices reflected a risk premium of up to $12/b due to fears of disruption in Iranian production and threats to the Strait of Hormuz. OPEC+ responded by increasing supply by 0.55 million barrels per day to try to offset shortages and ease price pressures.
- Market Volatility: Besides oil, global commodities, equities, and currencies saw increased volatility amid the war-related risk, impacting refinery margins and biofuel prices as well.
- Sectoral Impacts: Energy and defense sectors outperformed as investors anticipated sustained demand for oil and military expenditure. For example, the S&P 500 Energy Sector index rallied 12% in 2025, while defense contractors like Lockheed Martin and Raytheon gained over 15%.
- Safe Havens and Inflation Concerns: Gold prices surged, reaching around $2400/ounce in July 2025, reflecting investor flight to safety amid inflation fears linked to rising energy costs.
- Market Moderation and Outlook: Despite the price spikes, markets remained relatively calm due to expectations that parties would avoid a full closure of the Strait of Hormuz, and OPEC+ supply increases plus slower demand growth suggest a potential supply glut by late 2025, which may push prices lower in the medium term.
As of Sunday evening trading, crude oil prices have surged. West Texas Intermediate futures jumped over 6% to nearly $76 a barrel. The Israel-Iran conflict continues to pose a potential risk to global energy supplies, and US stock futures are fluctuating due to missile strikes between the two nations. Gold prices are still rising alongside oil due to increasing geopolitical tensions. Major US indexes are in negative territory due to the previous week's sell-off.
[1] IndexBox Market Intelligence Platform [2] CNBC [3] Financial Times [4] Bloomberg [5] Reuters
- The surge in crude oil prices, as seen with West Texas Intermediate futures reaching nearly $76 a barrel, is partially attributed to the ongoing Israel-Iran conflict, as it poses a potential risk to global energy supplies.
- Amidst the conflict, the global trade and finance sectors remain affected, with US stock futures fluctuating and gold prices still rising due to increasing geopolitical tensions.
- In the energy industry, the recent conflict has led to concerns about supply disruptions and the strategic vulnerability of the Strait of Hormuz, which carries about one-third of global oil exports.
- The ongoing Israel-Iran conflict and its impact on oil prices have influenced the global political landscape, affecting industries ranging from oil-and-gas to defense, leading to sectoral outperformance, as evidenced by the S&P 500 Energy Sector index rallying by 12% in 2025.
