Israel-Iran tension: UAE fuel prices could rise as oil rates nears $100, experts warn
The ongoing conflict between Israel and Iran has sent shockwaves through global oil markets, with crude prices surging and concerns rising that UAE fuel prices could follow suit in the coming month. Analysts warn that if the geopolitical tensions continue to escalate, oil prices could breach the $100 mark, and in extreme scenarios, may even reach $120.
Crude Prices Surge Following Israel’s Strike on Iran
On Friday morning, Israel conducted a significant military strike in Iran, reportedly targeting nuclear and military facilities. The action is being viewed as a major escalation in the ongoing tensions between the two countries. The incident immediately affected global oil markets, contributing to a sharp rise in crude prices amid concerns over potential disruptions in the region.
Following the attack, crude oil prices rose sharply, with prices climbing as much as 14 percent. Over the weekend, West Texas Intermediate (WTI) crude settled at $72.98 per barrel, and Brent crude closed at $74.23 — an increase of 7.26% and 7.02%, respectively.
For UAE motorists, this trend is particularly important. If global oil prices remain elevated, or continue to climb, fuel prices at the pump in the UAE are likely to rise in the coming month. In June, the UAE’s fuel prices were held steady, with:
Market analysts and financial experts have expressed concerns that the situation could lead to increased volatility and significantly higher oil prices, depending on how events unfold.
Naeem Aslam, an analyst at Zaye Capital, warned, “Markets are staring down a barrel of volatility. Oil’s surged up to 14 per cent on Israel’s strikes; prices could breach $120 if energy infrastructure gets hit. Markets are on edge – any disruption in this oil-rich region could send crude soaring further.”
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noted that the market's response has already been significant. She explained, “Tensions eventually eased [after Israel's October 2024 strike on Iran], and markets quickly settled. A similar de-escalation is possible now, but not guaranteed. Judging by the price action, the market’s response to last night’s attack has been very strong.”
She outlined two possible scenarios:
De-escalation, which could bring oil back below $70 per barrel, with attention shifting back to fundamentals like supply-demand dynamics and trade issues.
Escalation, potentially pushing oil toward $90–$100 per barrel, “hopefully only temporarily,” she added.
Supply Resilience Could Soften Long-Term Impact
Despite the sharp price spike, some analysts believe the rise could be temporary, as the global oil market remains fundamentally strong in terms of supply and reserves.
Norbert Ruecker, head of economics and next-generation research at Julius Baer, said oil remains a reliable indicator of geopolitical tension. “The situation remains in flux, and the coming days and weeks will show how far the escalation goes. Our best guess is that this latest conflict eruption follows the usual pattern, with prices rising temporarily before returning to previous levels,” he said.
Ruecker emphasized that the oil market is resilient and less vulnerable than in the past:
Strait of Hormuz: The Critical Chokepoint
The Strait of Hormuz, which handles more than 20 million barrels of crude oil per day, remains the world’s most critical oil transit chokepoint. Any threat to this vital passage can have immediate and far-reaching consequences.
Ole Hansen, head of commodity strategy at Saxo Bank, warned, “Even a brief disruption of the Strait of Hormuz… could trigger a sharp price spike, with some analysts warning of a potential move toward $100 per barrel in a worst-case scenario.”
While the current spike is being interpreted by some as a knee-jerk reaction to military developments, the oil market’s long-term trajectory will depend heavily on how Israel and Iran navigate the conflict in the coming days.
Crude Prices Surge Following Israel’s Strike on Iran
Following the attack, crude oil prices rose sharply, with prices climbing as much as 14 percent. Over the weekend, West Texas Intermediate (WTI) crude settled at $72.98 per barrel, and Brent crude closed at $74.23 — an increase of 7.26% and 7.02%, respectively.
For UAE motorists, this trend is particularly important. If global oil prices remain elevated, or continue to climb, fuel prices at the pump in the UAE are likely to rise in the coming month. In June, the UAE’s fuel prices were held steady, with:
- Super 98 priced at Dh2.58/litre
- Special 95 at Dh2.47/litre
- E-Plus at Dh2.39/litre
Market analysts and financial experts have expressed concerns that the situation could lead to increased volatility and significantly higher oil prices, depending on how events unfold.
Naeem Aslam, an analyst at Zaye Capital, warned, “Markets are staring down a barrel of volatility. Oil’s surged up to 14 per cent on Israel’s strikes; prices could breach $120 if energy infrastructure gets hit. Markets are on edge – any disruption in this oil-rich region could send crude soaring further.”
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noted that the market's response has already been significant. She explained, “Tensions eventually eased [after Israel's October 2024 strike on Iran], and markets quickly settled. A similar de-escalation is possible now, but not guaranteed. Judging by the price action, the market’s response to last night’s attack has been very strong.”
She outlined two possible scenarios:
Despite the sharp price spike, some analysts believe the rise could be temporary, as the global oil market remains fundamentally strong in terms of supply and reserves.
Norbert Ruecker, head of economics and next-generation research at Julius Baer, said oil remains a reliable indicator of geopolitical tension. “The situation remains in flux, and the coming days and weeks will show how far the escalation goes. Our best guess is that this latest conflict eruption follows the usual pattern, with prices rising temporarily before returning to previous levels,” he said.
Ruecker emphasized that the oil market is resilient and less vulnerable than in the past:
- Ample storage is available in both the West and China.
- Plentiful spare production capacity exists, over 5% of global output, and is now being reintroduced to the market.
- Exports outside the Middle East are growing steadily.
Strait of Hormuz: The Critical Chokepoint
The Strait of Hormuz, which handles more than 20 million barrels of crude oil per day, remains the world’s most critical oil transit chokepoint. Any threat to this vital passage can have immediate and far-reaching consequences.
Ole Hansen, head of commodity strategy at Saxo Bank, warned, “Even a brief disruption of the Strait of Hormuz… could trigger a sharp price spike, with some analysts warning of a potential move toward $100 per barrel in a worst-case scenario.”
While the current spike is being interpreted by some as a knee-jerk reaction to military developments, the oil market’s long-term trajectory will depend heavily on how Israel and Iran navigate the conflict in the coming days.
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