Global oil markets are once again on edge as geopolitical tensions surrounding Iran intensify, reversing much of the steady decline seen throughout 2025. Since the start of 2026, crude prices have climbed roughly 15%, driven largely by renewed uncertainty over Tehran’s nuclear negotiations with United States.
Washington and Tehran have been engaged in high-stakes talks aimed at reviving a nuclear agreement that would limit Iran’s ability to develop nuclear weapons. However, President Donald Trump recently stated that Iran has ten days to reach a deal, heightening concerns that military action could follow if negotiations fail.
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Iran holds the world’s third-largest proven crude oil reserves and ranks among the top ten global producers. But beyond supply volumes, markets are particularly sensitive to the security of the Strait of Hormuz, a narrow maritime corridor through which nearly 20 million barrels of petroleum products pass daily. Any disruption there could send shockwaves through global energy markets.
According to Jorge Leon, Head of Geopolitical Analysis at Rystad Energy, if U.S. intervention remains limited and targeted, oil prices could rise by about $10 per barrel before quickly retreating to more stable levels.
However, in the event of a prolonged military campaign, particularly if Iran retaliates by targeting regional oil infrastructure, markets could experience a sustained increase of around $15 per barrel, Leon warned.
Daniela Hathorn, analyst at Capital Economics, told Yahoo Finance that market reactions would depend less on political rhetoric and more on the scale and consequences of any potential military strike.
“If markets begin pricing in the likelihood of U.S. action within the next two weeks, the reaction will hinge on the magnitude of the operation and its fallout,” she noted. Even without immediate military escalation, prolonged uncertainty alone may be sufficient to sustain a geopolitical risk premium in oil prices.
Energy traders are weighing not only the risk of supply disruption but also the broader impact on inflation, shipping routes, and global economic growth. A sharp and sustained spike in oil prices could complicate monetary policy decisions in major economies already navigating fragile post-pandemic recoveries.
For now, analysts agree that volatility is likely to persist. The trajectory of oil prices will depend heavily on diplomatic developments, and whether tensions de-escalate or spill over into open conflict.
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