Oil prices could spike as much as 15 dollars a barrel if US-Iran conflict moves from ‘rhetoric to action’
Oil prices have re-crested their highest levels since last summer as traders closely watch the potential for a military strike by the United States against Iran. Where they go from here, according to analysts and oil market experts, depends on whether rhetoric from the Trump administration turns into action.
Futures on Brent crude (BZ=F), the international pricing benchmark, and US benchmark West Texas Intermediate crude (CL=F) both rose around 2% to trade above $71.90 and $66.50 on Thursday, respectively.
The US and Iran are engaged in active talks on a new agreement that would severely limit Iran’s ability to both enrich and hold uranium to the levels needed to create nuclear weapons, though Trump said in a Truth Social post at the end of January that the US armada in the Middle East is “ready, willing, and able to rapidly fulfill its mission, with speed and violence.”
“In normal circumstances, such a scenario would dominate global financial headlines,” Capital analyst Daniela Hathorn said in a note to clients Thursday. “This complacency raises the risk of a sharp repricing event. If tensions move from rhetoric to action, oil could spike rapidly.”
On Tuesday, US officials signaled progress in the negotiations, while Iranian foreign minister Abbas Araghchi said the two nations had reached a “general agreement on a set of guiding principles” and that they would move toward drafting an agreement.
“Maybe we’re going to make a deal,” Trump said in a speech on Thursday morning. “You’re going to be finding out over the next probably 10 days.”
At the same time, the Trump administration has steadily built up its military presence in the region, most recently sending a second aircraft carrier to Middle Eastern waters in what has become the largest air power assembly in the Middle East since the 2003 invasion of Iraq, according to the Wall Street Journal.
The setup has so far looked similar to price action in the days leading up to the so-called “12-day war” between Iran and Israel in June 2025. As tensions heated between the two Middle Eastern powers, oil prices rose roughly 4%. But in the week after Israel’s first airstrikes in Iranian territory on June 13, oil surged upward by more than 10%, according to Yahoo Finance data.
The “muted response” in price action so far from oil traders this time around “suggests that investors are either skeptical of imminent escalation or confident that any conflict would be short-lived,” Hathorn said.
While Iran sits on the third-largest proved crude oil reserves in the world and ranks in the top 10 of producers globally, oil markets pay most attention to the Strait of Hormuz, a critical shipping chokepoint that sees roughly 20 million barrels of petroleum products per day cross through its waters.
Even with maximum dispersion through a series of pipelines in the region, sustained interference in the strait would leave around 9 million barrels per day of crude supply, or approximately 9% of global oil demand, “structurally at risk,” according to the energy intelligence firm Kpler.
Despite repeated threats to close the strait in times of high tensions, Iran has never fully closed the waterway, and analysts told Yahoo Finance that it would be highly difficult for the regime to do so, especially given that the route is a key export lane for Iran itself.
In a situation where a US strike were to remain small and targeted, Rystad Energy’s head of geopolitical analysis Jorge León told Yahoo Finance, prices would likely jump by roughly $10 per barrel before very quickly coming back down to rebalance.
If the US were instead to pursue a sustained military campaign, León said — especially if it were to prompt retaliation by Iran, such as strikes against oil infrastructure in the region — markets would likely see a “sustained price increase [of roughly] $15 per barrel.”
Omani Foreign Minister Sayyid Badr Hamad Al Busaidi, US President Donald Trump’s Special Representative for the Middle East Steve Witkoff, and US negotiator Jared Kushner meet ahead of the US-Iran talks, in Muscat, the capital of Oman, on Feb. 6, 2026. (Oman Foreign Ministry/Anadolu via Getty Images) ·Anadolu via Getty Images
And if, in the “low but not zero” probability that the US and Iran sign a new deal before any conflict — prompting a lifting of sanctions and full resumption of Iranian exports — prices would likely fall by roughly $5 as one of several geopolitical risk premiums applied to the market right now clears up, León said.
Iran may also have the benefit of time, León said. The Trump administration and wider Republican party are under the gun to soon face an electorate focused on domestic prices, creating a “lack of alignment” between the two parties.
“The last thing that the US administration would want to do is to see a sharp increase in oil prices just before the midterm election,” León said, leaving the chances of a breakthrough on a new deal “limited.”
But that doesn’t mean military action is guaranteed, or that even if the US does choose to strike, the administration would pursue a wide operation instead of targeted and narrow attacks designed to send a message rather than trigger widespread retaliation and destabilization.
Truist chief investment officer and chief market strategist Keith Lerner told Yahoo Finance that he would caution investors “not to react,” given that “typically these geopolitical events can have a short-term impact.”
For now, oil continues to trade in an elevated, but relatively stable, band as the market remains in wait-and-see mode for any directional tells.
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
