Impact on Oil Prices from the Middle-East Crisis

Original Published Date on Medium: June 17th, 2025

Reference: https://medium.com/@virikajuneja/impact-on-oil-prices-from-the-middle-east-crisis-fb35f72ee63e

With the recent escalations in the Middle-East crisis, the price of Brent Crude Oil, has already crossed $70 per barrel. In June, the prices were $61. The conflict could not only wipe off Iran’s oil exports but also severely restrict oil supplies from the wider Middle-East region. One-Fifth of global oil and one-third of global LNG (Liquified Natural Gas) shipments pass through the narrow Strait of Hormuz. If the strait gets blocked and the conflict escalates, oil prices could rise beyond those seen during the beginning of the Russia-Ukraine war.

Oil Tankers have already started avoiding the Strait. Shipping freights have already increased 20% since the start of the conflict, per LSEG. Cargo insurance for this route have increased between $3-$8/barrel.

Despite the above concerns, there are incentives to keep flow of oil and gas from the Strait of Hormuz. Oil is Iran’s primary export consisting around 80% of its overall export revenues. In addition, China being the largest consumer of Iranian oil can help keep the shipping routes open.