Middle East Tensions Push Crude to Three-Year High

Oil Prices Surge as Israel-Iran Conflict Raises Global Supply Fears

An unexpected oil rally is gripping global markets following the outbreak of open conflict between Israel and Iran. Over the past several days, the two countries have exchanged missile strikes, with Israel targeting nuclear facilities and fuel depots, while Iran retaliates against what it calls unprovoked attacks. The escalation marks a sharp intensification of hostilities, with implications now reaching deep into global energy markets.

Crude benchmarks have surged from the low $60s to the mid-$70s in just days. Analysts warn prices could reach $80 a barrel if the situation worsens, with some forecasting even steeper spikes if energy infrastructure comes under sustained attack. The sharp increase marks the biggest single-week rally in oil prices in three years.

Western Canadian Select (WCS), Canada’s heavy crude benchmark, has risen to over $55 per barrel as buyers search for stable alternatives to Iranian supply. WCS is typically seen as a substitute for Middle East heavy crude, and demand for it tends to increase during periods of geopolitical instability involving Iran.

Although most of Iran’s energy facilities are focused on domestic supply, its role as the third-largest oil producer in OPEC means any disruption or escalation has global consequences. This weekend, Israel reportedly struck gas processing infrastructure at the South Pars field, Iran’s largest, sparking fears of further targeting of energy assets.

The Strait of Hormuz, through which roughly a fifth of global oil passes, remains a key concern. While Iran has repeatedly threatened to block the strait, it has never followed through. However, any move to disrupt this critical chokepoint could send oil prices soaring beyond current projections, with some estimates suggesting a possible jump to $130 a barrel in the event of a full-scale closure.

For now, global markets remain on edge. While major export facilities have not yet been hit, the potential for further escalation remains high. Energy analysts warn that prolonged conflict targeting oil infrastructure could strain even OPEC’s spare capacity, destabilize supply chains, and add significant inflationary pressure worldwide.