Oil prices surge on report of possible Israeli strike on Iran

May 21, 2025 (MLN): Oil jumped after CNN reported that US intelligence suggests Israel is making preparations to possibly strike Iranian nuclear facilities.

Brent crude futures increased by $1.3, or 1.99%, to $66.58 per barrel.

West Texas Intermediate (WTI) crude futures rose by $1.2, or 1.93%, to $63.23 per barrel by [9:40 am] PST.  

It isn’t clear that Israeli leaders have made a final decision to carry out the strikes, CNN said, citing unnamed officials.

Oil prices have been volatile since last week on mixed headlines about the fate of Iran-US talks, which could pave the way for more barrels to return to a market that’s expected to be oversupplied later in the year.

An attack by Israel would hinder any progress in those negotiations and add to volatility in the Middle East, which supplies about a third of the world’s oil.

Iran’s Supreme Leader Ali Khamenei on Tuesday said he didn’t think the latest effort to negotiate with the US would lead to a result.

A strike would fly in the face of the Trump administration's efforts to secure a new nuclear deal with Iran.

"We're getting close to maybe doing a deal" without having to resort to military action, President Donald Trump said last week during a trip to Qatar."

"But earlier Tuesday, Iran's Supreme Leader Ayatollah Ali Khamenei called the Trump administration's latest demands "outrageous" and said a deal was unlikely, according to Bloomberg News.

While Israel and Iran have fought proxy and clandestine wars for decades, direct military action has been rare. But that's changed over the past year. 

In April 2024, Iran launched a massive missile attack on Israel, most of which were intercepted, after an Iranian consular building in Syria was hit by a suspected Israeli airstrike. 

In October, Iran again fired dozens of missiles at Israel, again causing little damage, in response to Israel's incursion into southern Lebanon. 

Israel responded with airstrikes against military targets in Iran.

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