Oil Prices Rise Nearly 5% as Fears of a Prolonged Iran Conflict Outweigh IEA Reserve Release

Crude oil prices rose nearly 5% during the Asian trading session this morning as markets continued to react to escalating geopolitical risks in the Middle East. WTI crude climbed to around $94.3 per barrel, while Brent approached $99.9 per barrel, indicating that concerns over supply disruptions are still dominating sentiment in global energy markets.

The rally came despite the International Energy Agency (IEA) announcing plans to release about 400 million barrels from strategic reserves in an effort to stabilize the market. However, the price reaction suggests that investors are currently focusing more on the risk of actual supply disruptions rather than on temporary intervention measures.

The market’s primary focus remains geopolitical tensions in the Middle East, particularly the ongoing conflict involving the United States and Iran, which has shown little sign of easing. Recent U.S. intelligence reports indicate that Iran’s leadership structure remains largely intact and is not at immediate risk of collapse, despite continued airstrikes by the United States and Israel. This suggests that the prospect of regime change in Iran is unlikely in the near term, implying that tensions in the region could persist for an extended period.

If the conflict continues, the risk of disruptions to energy supplies from the Middle East is likely to remain elevated, particularly regarding oil shipments through the Strait of Hormuz, a key chokepoint that carries roughly 20% of global oil supply. In this environment, geopolitical risks continue to be reflected in oil prices, helping maintain elevated levels in the near term.

Meanwhile, although the planned release of around 400 million barrels is relatively large, the market generally views the move as a short-term stabilizing measure. If geopolitical tensions persist or oil transportation through the Strait of Hormuz faces prolonged disruption, the strategic reserves may not fully offset potential supply shortages from the Middle East.

As a result, concerns about supply risks linked to geopolitical tensions continue to support oil prices in the short term. With supply risks still unresolved, investors are likely to keep pricing in the possibility of future supply shortages, thereby sustaining upward pressure on crude prices.

In my view, the outlook for oil prices in the coming period will depend largely on geopolitical developments in the Middle East. If tensions escalate further or new signs of supply disruptions emerge, oil prices may continue their upward trajectory, with WTI potentially moving toward the $100 per barrel level and Brent likely exceeding $100 per barrel. Conversely, any signs of de-escalation in the region could ease supply concerns and allow oil prices to correct.