:max_bytes(150000):strip_icc()/GettyImages-2215757973-ce02e32e6c534592bc26af1e650d2f76.jpg "Iran Attack: Oil Prices & Inflation Impact")
Iran Attack: Oil Prices & Inflation Impact
- Oil prices spiked Friday following reports of an Israeli attack on Iranian military and nuclear facilities, intensifying Middle East tensions.
- Earlier, it had jumped as much as 14%, marking its largest intraday increase in years.
- JPMorgan analysts had cautioned earlier in the week that a full-scale conflict between Israel and Iran, a major oil producer, could push oil prices above $100 for the...
Oil prices soared after Israel’s attack on Iran, instantly igniting fears of escalating inflation. This initial shock saw both WTI and Brent crude futures jump, with analysts warning of the potential for even greater surges. A major conflict could push prices above $100 a barrel, potentially worsening existing inflationary pressures, as highlighted by reports from News Directory 3. Experts are now weighing the possibility of supply disruptions and the strategic need for Iran to maintain its oil sales to China. Despite the volatility, some analysts predict stabilization. Discover what’s next for gasoline prices and the overall economic landscape.
Oil Prices Surge Amid Israel-Iran Conflict, Raising Inflation Concerns
Updated June 13, 2025
Oil prices spiked Friday following reports of an Israeli attack on Iranian military and nuclear facilities, intensifying Middle East tensions. The surge has sparked concerns about potential disruptions to global oil supplies and the impact on inflation.
West Texas Intermediate (WTI) crude futures, the U.S. benchmark, rose about 7.5% to $73.12 a barrel Friday. Earlier, it had jumped as much as 14%, marking its largest intraday increase in years. Brent crude futures, the global benchmark, also climbed more than 7%, reaching $74.38.
JPMorgan analysts had cautioned earlier in the week that a full-scale conflict between Israel and Iran, a major oil producer, could push oil prices above $100 for the first time since the Russia-Ukraine war in 2022. Such a spike could exacerbate existing inflationary pressures.
Ryan Sweet, chief U.S. economist at Oxford Economics,estimated that every $10 increase in oil prices could translate to a 0.5 percentage point increase in the inflation rate, according to the Wall Street Journal.
Lower Oil Prices Help Curb Inflation
Relatively low oil prices have played a key role in moderating inflation this year. The Consumer Price Index (CPI) increased 2.4% year-over-year in May. JPMorgan estimates that oil at $120 a barrel could drive CPI up to 5%.
Kristian Kerr, Head of Macro Strategy at LPL Financial, noted the primary market concern involves Iran potentially closing the Strait of Hormuz, a critical transit point for about one-fifth of the world’s oil supply. “We think this is unlikely for now given iran’s need to maintain oil sales to China,” kerr added.
Another risk involves either Israel or Iran targeting regional oil infrastructure, which could significantly impact global oil supply and, consequently, gas prices.
Absent a major escalation, experts anticipate oil prices will stabilize after Friday’s surge. Goldman sachs analysts acknowledged the conflict would likely increase oil’s risk premium in the short term but maintained their forecast that WTI will trade around $55 a barrel by year’s end.
What’s next
The market will closely monitor developments in the Middle East to assess the likelihood of further escalation and its potential impact on global oil supplies and inflation. Any significant disruption could lead to higher gasoline prices and broader inflationary pressures.