On June 16, 2025, Oil prices exhibited sharp volatility on Monday, following a 7% surge on Friday, as renewed military escalation between Israel and Iran heightened investor concerns over potential disruptions to energy exports from the Middle East.

Brent crude and West Texas Intermediate (WTI) futures initially climbed over USD4 per barrel in early trading, before retracing gains. As of 0816 GMT, Brent crude was down 30 cents (0.4%) to USD73.93 per barrel, while WTI fell 18 cents (0.3%) to USD72.80. Both benchmarks had settled 7% higher on Friday, having spiked more than 13% during the session to their highest levels since January.

The price fluctuations come amid rising geopolitical tensions after Iranian missile strikes hit Israel’s Tel Aviv and the port city of Haifa, damaging homes and increasing global concerns over a broader regional conflict. The G7 leaders' meeting this week is expected to address the risks of escalation and potential energy supply disruptions.

“The key issue remains whether the conflict spills over into energy infrastructure,” said Harry Tchilinguirian, Head of Research at Onyx Capital Group. “So far, there has been no direct impact on production or exports, and Iran has not attempted to block the Strait of Hormuz. However, the trajectory of this conflict is highly uncertain.”

The Strait of Hormuz remains a critical chokepoint, with approximately 18–19 million barrels per day (bpd) of oil, condensate, and refined fuels—around 20% of global demand—transiting through it. Any threat to this route could significantly drive up oil prices.

While there are growing concerns over the possibility of Israeli strikes targeting Iranian energy infrastructure, analysts are also monitoring for potential retaliation by Iran that could restrict tanker movement in the Strait. Iran currently produces around 3.3 million bpd and exports over 2 million bpd. OPEC+’s spare production capacity could offset a disruption of this scale, but markets remain wary.

“If Iranian crude exports are interrupted, Chinese refiners—currently the primary buyers of Iranian oil—would be forced to seek alternative sources, potentially from other Middle Eastern nations or Russia,” noted Richard Joswick, Head of Near-Term Oil Analysis at S&P Global Commodity Insights. He added that such a shift could tighten freight markets, increase tanker insurance premiums, narrow the Brent-Dubai spread, and pressure refinery margins, particularly in Asia.

Meanwhile, China's crude throughput fell 1.8% in May year-over-year, reaching the lowest level since August due to refinery maintenance.

Efforts for diplomatic resolution remain stalled. While former U.S. President Donald Trump expressed hope for a ceasefire, Iran reportedly informed mediators it will not engage in talks while under Israeli attack.