Oil Prices Slip As Fears Of US Strike On Iran Ease | Outlook India
Oil markets around the world are suddenly on edge—and this time, analysts say the concern isn’t exaggerated.
A leading energy expert believes there’s a 75% probability that the United States could launch a military strike on Iran in the coming days or weeks, a scenario that could trigger one of the biggest disruptions to global oil and LNG supplies in years.
According to Bob McNally, founder of Rapidan Energy Group and a former White House energy adviser, markets are no longer treating the risk as hypothetical. “This one is real,” he warned, explaining that traders are actively pricing in the possibility of prolonged energy supply disruption.
Why oil markets are reacting now
Brent crude prices have already climbed 5% in the past week and are up 14% since the start of the year. What’s notable, McNally says, is that oil prices have broken their long-standing pattern—short-lived spikes followed by sharp pullbacks. This time, prices are holding firm.
That’s a big signal. It suggests traders believe the geopolitical risk could translate into sustained supply disruptions, not just temporary volatility.
What’s different from past U.S. actions?
Recent military actions didn’t move markets much. A U.S. strike on Iran’s nuclear facilities last year caused only a brief price jump because oil infrastructure was left untouched. Similarly, the failed U.S. raid aimed at capturing Venezuela’s Nicolás Maduro barely registered in oil trading circles.
But the current situation feels different.
Iran produces about 4.7 million barrels of oil per day, roughly 4.4% of global supply. While much of that oil—often shipped via a “shadow fleet”—ends up in China due to sanctions, the real danger lies elsewhere.
The Strait of Hormuz: the true pressure point
The biggest concern is the Strait of Hormuz, a narrow but critical waterway through which nearly 20% of the world’s oil and liquefied natural gas (LNG) flows every day.
Markets often assume the U.S. Navy could quickly neutralize any threat to shipping there. McNally disagrees.
He points out that the U.S. struggled to fully secure Red Sea shipping routes from Houthi rebel attacks, eventually opting for a ceasefire approach. Iran, he notes, has far superior weaponry and a more strategic coastline, making any disruption far harder to manage.
Escalating rhetoric raises the stakes
Iran’s supreme leader has issued a stark warning: any U.S. attack would ignite a regional war in the Middle East. This is the strongest threat yet amid Washington’s military buildup in the region.
At the same time, sources suggest the Trump administration has quietly told Tehran it remains open to negotiations—an indication that diplomacy hasn’t been fully abandoned.
What happens if the Strait is blocked?
If Iran were to successfully disrupt shipping through the Strait of Hormuz—even briefly—the impact could be enormous.
McNally cautions that even a shutdown lasting more than a day or two could shock global energy markets, particularly LNG. In that scenario, buyers would scramble for spot cargoes, triggering what he describes as “the mother of all bidding wars.”
The uncomfortable truth? Markets have never truly experienced a prolonged blockade of the Strait under modern energy conditions. That uncertainty alone is enough to keep prices elevated.
The bottom line
Oil traders aren’t panicking—but they are preparing. With military tensions rising, energy infrastructure at risk, and the world still heavily dependent on Middle Eastern supply routes, the possibility of a major shock is no longer theoretical.
As McNally puts it, markets are now pricing in a future where history may not repeat itself.
Br#global energy markets, #OilMarkets#MiddleEastTensions #EnergyCrisis #Geopolitics