NYMEX front-month crude opens $3.07 higher at $78/b following US strikes on Iranian nuclear sites

Oil futures rallied late June 22 following US airstrikes on Iranian nuclear facilities.

NYMEX front-month crude opened $3.07 higher at $78/b, quickly rallied to $78.40/b before slipping back to trade at around $76.30/b at 2210 GMT.

Likewise, ICE front-month Brent was trading at $79.73/b at 2210 GMT, up $2.72 after rising to $81.40/b.

US warplanes bombed Iran's Fordow, Natanz and Esfahan nuclear sites early June 22, following through on US President Donald Trump's threats to keep Iran from obtaining a nuclear weapon.

Speaking live from the White House, Trump warned the US would hit other targets if Iran does not come to a peace agreement.

"We will go after those other targets with precision, speed and skill," Trump said.

In response to the strike, Iran has threatened to close the Strait of Hormuz, which would represent a significant escalation considering that 20% of global oil and LNG transits the waterway.

A key national security committee of Iran's parliament met June 22 without reaching a consensus on whether the Strait should be blocked, though lawmakers said the option remains open.

Oil and LNG tanker traffic through the Strait of Hormuz appeared normal on June 22 despite escalating Middle East tensions.

Many experts consider a prolonged Strait of Hormuz disruption less likely due to the US naval presence in the region, as well as the potentially stark impacts on Iran's own oil exports, which have averaged around 1.5 million b/d in recent months.

Iran ships nearly all its oil from its terminal on Kharg Island within the Persian Gulf to its main customer, China.

Alternative supply routes for Middle Eastern oil and gas are limited, with pipeline capacity insufficient to offset potential maritime disruptions through the Persian Gulf and Red Sea.

Yemen-based Houthi rebels said that if the US gets involved in Israel's fight against Iran, the group will target US ships and US warships in the Red Sea, calling into question a May 6 truce signed with Washington.

NYMEX front-month crude has rallied roughly $17 since end-May, largely elevated by concerns that Israeli strikes would damage Iranian oil infrastructure or that oil flows through the Strait of Hormuz would be disrupted.

While Israel has targeted key Iranian oil and gas facilities, including the South Pars Gas Field, Iran is still able to produce roughly 4 million b/d of crude and condensate.

Absent a supply disruption, the global oil market is expected to be well-supplied in 2025 and 2026.

S&P Global Commodity Insight analysts said total global oil demand growth for 2025 is expected to be the weakest since 2001, excluding economic downturns during the 2008-09 financial crisis and coronavirus pandemic, averaging just 770,000 b/d. This weak demand backdrop, combined with OPEC+'s decision to proceed with accelerated unwinding of production cuts and supply growth from countries like Canada, Guyana and Brazil, means oil markets are oversupplied.