Oil News: Crude Oil Soars 13% After Israel Strikes Iran in Major Escalation

Breaking – Israel Strikes Iran, Oil Markets Explode Higher

Israeli fighter jets hammered Iranian nuclear facilities early Friday morning, sending crude prices rocketing 13% in the biggest single-day surge since 2020. Operation Rising Lion targeted nuclear sites at Natanz, Khondab, and military installations across Tehran.

Brent Crude Breaks $78 as Traders Rush to Cover Shorts

The immediate market reaction caught many traders flat-footed. Brent crude futures ripped through resistance at $75, reaching $78.02 per barrel. WTI followed suit, jumping to $77.25. Volume exploded to three times the daily average as algorithmic trading systems triggered massive buy programs.

Short covering intensified the move. Hedge funds had built record short positions betting on continued weakness from Chinese demand concerns. Those positions are now deeply underwater, forcing panic buying that could extend gains into next week.

Iran’s 3.3 Million Barrels at Risk – What Traders Need to Know

Iran pumps approximately 3.3 million barrels per day, representing 3% of global supply. More critically, the regime exports 1.6 million barrels daily through the vulnerable Kharg Island terminal. That’s 90% of their crude exports flowing through a single chokepoint.

Chinese refiners take nearly all of Iran’s exports. Beijing’s teapot refineries depend on discounted Iranian crude to maintain margins. Any disruption forces them into spot markets, competing with other Asian buyers for alternative supplies.

The geography matters here. Kharg Island sits exposed in the Persian Gulf, within range of Israeli missiles. Unlike Iran’s buried nuclear facilities, oil infrastructure can’t hide underground. Storage tanks, loading terminals, and offshore platforms present soft targets.

OPEC+ Spare Capacity Could Cap the Rally – But There’s a Catch

Saudi Arabia holds the key to preventing a sustained price spike. The Kingdom maintains 3.1 million barrels per day of spare capacity, theoretically enough to replace Iranian exports twice over. UAE adds another 1.1 million barrels of backup production.

Here’s the problem: turning valves takes time. Saudi Aramco needs 30-60 days to ramp up mothballed production. Pipeline constraints and shipping logistics add complexity. Markets hate uncertainty, and that lag time creates a risk premium.

The House of Saud faces a delicate calculation. Flooding markets too quickly crashes prices and angers other OPEC+ members. Moving too slowly risks demand destruction above $100 per barrel. Expect carefully calibrated increases rather than shock-and-awe production surges.

Trading the Conflict – Key Levels and Catalysts

Technical traders should watch $80 Brent as initial resistance, with $85-86 marking the February highs. Support builds at $75 on any pullback. Options skew has gone vertical, with calls trading at massive premiums to puts.

The next 72 hours determine whether this stays contained or spirals wider. Watch for Iranian retaliation announcements, U.S. naval movements in the Gulf, and Saudi production statements. Each headline brings volatility.

Smart money is buying energy equities over futures. Integrated oils offer leverage to higher prices without contango risk. Refiners face margin compression from crude spikes – avoid that sector. Tanker rates should explode higher on longer voyage times avoiding conflict zones.

More Information in our Economic Calendar.