ExxonMobil CEO Darren Woods describes the impact of the Center East battle on the worldwide oil market on ‘Particular Report.’
If the escalating battle between Israel and Iran considerably cuts provide within the world oil market, costs might surge to as a lot as $120 a barrel as a consequence of a possible menace to a big transport lane, based on trade consultants.
The worth of West Texas Intermediate, a key crude oil benchmark, is sitting round a one-year excessive, whereas world benchmark Brent Crude is nearing a five-month excessive Wednesday because the battle between Israel and Iran enters its sixth day.
President Donald Trump met along with his nationwide safety workforce Tuesday to debate the escalating battle, sparking hypothesis the U.S. might be making ready to affix the assault, creating extra volatility available in the market, based on Ewa Manthey, commodities strategist at ING Monetary Service.
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Smoke billows for the second day from the Shahran oil depot, northwest of Tehran, June 16, 2025. (Getty Photographs / Getty Photographs)
However Manthey mentioned the “key fear for the market” is the potential for disruption to transport by way of the Strait of Hormuz, a vital waterway that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The waterway just isn’t solely vast sufficient to deal with the world’s largest crude oil tankers. It’s thought of one of many world’s most essential oil chokepoints, based on the Vitality Info Administration (EIA).
ExxonMobil CEO Darren Woods echoed these considerations, saying that whereas world oil provide is enough to face up to a disruption to Iranian exports, the larger concern is the potential influence on oil shipments by way of that waterway, which strikes virtually a 3rd of worldwide seaborne oil commerce.
A plume of heavy smoke rises from an oil refinery in southern Tehran after it was hit in an in a single day Israeli strike June 15, 2025. (Atta Kenare/AFP by way of Getty Photographs / Getty Photographs)
In 2024, 20 million barrels of oil per day, about 20% of worldwide petroleum liquids consumption, flowed by way of the waterway. There are additionally only a few various choices to maneuver oil out of the strait whether it is closed, based on the EIA.
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A big disruption to those flows could be sufficient to push costs to $120 per barrel, based on Manthey. But when disruptions persist towards the top of the yr, she famous that Brent might commerce to new report highs, surpassing the report excessive of near $150 per barrel reached in 2008.
President Donald Trump despatched a letter to Iran’s Supreme Chief Ayatollah Ali Khamenei March 6, 2025, telling him to “make a deal” with the U.S. over its nuclear program or face the U.S. “militarily.” (Fox Information Picture utilizing Getty Photographs / Getty Photographs)
“If this happens, we would want to see governments faucet into their strategic petroleum reserves,” Manthey mentioned, noting that it consists of the U.S., which sits on greater than 400 million barrels of crude oil in its strategic petroleum reserves.
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Manthey mentioned one other answer could be if the Group of the Petroleum Exporting International locations (OPEC+) tapped into its spare manufacturing capability of greater than 5 million barrels per day.
“Whereas they’re within the means of bringing provide again on-line, a disruption to Iranian provide could immediate them to carry this provide again at an excellent faster tempo,” Manthey mentioned.
