Tensions in the Middle East have escalated following Israeli air strikes targeting Iranian military and nuclear facilities early on Friday.

In response, oil prices experienced immediate fluctuations, with Brent crude oil initially surging by 12% to $78.50 per barrel before retracting to around $73 per barrel, as market participants continued to speculate about further developments.

The Strait of Hormuz has once again come into focus, representing a critical maritime corridor that separates Iran from other Gulf oil producers including Saudi Arabia, Kuwait, and the United Arab Emirates.

This strait is vital to global oil supply, through which approximately 21 million barrels of oil transit daily, accounting for about one third of the world’s maritime oil shipments.

Iran has historically threatened to close the strait but has not taken such action.

However, analysts suggest that the recent escalation, with Israel striking first, could influence Tehran's response.

Should Iran target oil tankers or regional infrastructure, oil prices might spike by $20 to $30 per barrel, exacerbating supply chain fears.

Market reactions to perceived threats to oil supply are typically pronounced.

Reports indicate that oil prices might not be accurately reflective of supply and demand dynamics; rather, a substantial risk premium has emerged due to geopolitical fears.

The Iranian oil export terminal, Kharg Island, which handles 90% of Iran's oil exports, is a significant target and any attack on it could have severe ramifications for both the Iranian economy and global oil prices.

According to analyses, sustained escalations could see oil prices soar to $120 per barrel, effectively double the current levels.

Economic experts note that Russia stands to benefit significantly from rising oil prices, with 30-50% of its budget reliant on oil and gas revenues.

A price surge to $120 per barrel could deliver billions of dollars to Moscow, potentially stabilizing the ruble and financing military expenditures while alleviating domestic social tensions.

This dynamic could foster a substantial budget surplus and challenge the effectiveness of existing sanctions against Russia.

Additionally, the situation remains precarious for Western nations, which might face renewed inflationary pressures and slowed economic growth as a result of increasing oil prices.

Support for Ukraine could diminish as the social cost of protracted conflict rises, giving Russia a potential advantage in both military and economic spheres.

As tensions persist, the OPEC+ consortium has come under scrutiny.

Recently, Saudi Arabia has been gradually easing production constraints, with plans to boost daily output by 1.4 million barrels by July and by an additional 800,000 barrels by September.

Despite this capacity, OPEC+ stated it does not currently see the need to intervene in the market.

The delicate situation indicates that a single targeted drone strike or maritime incident could again send oil prices surging.

Market participants remain cautious amid the backdrop of geopolitical uncertainty that could impact not only oil prices but also global inflation and political stability.

The Strait of Hormuz, a crucial and vulnerable maritime link, represents a significant chokepoint for global oil supply.

Any disruption, even a partial closure, could trigger immediate supply shocks and price hikes, as most tanker traffic cannot bypass this narrow waterway.

Iran's past threats to blockade the strait could resurface if the current conflict escalates, posing a credible risk to global energy security.

Thus, stakeholders in the oil market are closely monitoring actions from both Iran and Israel, as well as the status of the Strait of Hormuz, marking it as one of the pivotal issues at the intersection of energy and security policy.